Gecko Company and Gordon Company are two firms whose business risk is the same but that have different dividend policies.

Gecko pays no dividend, whereas Gordon has an expected dividend yield of 6 per cent.

Suppose the capital gains tax rate is zero, whereas the dividend tax rate is 12.5 per cent.

Gecko has an expected earnings growth rate of 15 per cent annually, and its share price is expected to grow at this same rate. If the after-tax expected returns on the two equities are equal (because they are in the same risk class), what is the pre-tax required return on Gordon’s shares?