14. Expected Return, Dividends and Taxes. The Gecko Company and the 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 3.5%. Suppose the capital gains tax rate is zero, whereas the income tax rate is 28%. Gecko has an expected earnings growth rate of 12% annually, and its share price is expected to grow at this same rate. If the after-tax expected returns on the two shares are equal (because they are in the same risk class), what is the pre-tax required return on Gordons shares? LO 14.2