Ashworth Corp has just paid its annual dividend of $10.00. The company has announced an aggressive expansion plan. The plan requires investment for the next three years. The company decides to fund the three years of expansion by not paying a dividend for three years. The company will resume paying dividends in year 4 with a dividend of $12.00 per share. After this, the company will grow its dividends at a rate of 8.0% thereafter {D₁ = D₂ = D₃ = $-, D₄ = $12.00, D₅ = $12.00(1 + 8.0%), and so on}. The companys cost of equity is 12.0%.

1. The companys capital gains yield today is (round to 1 decimal place)?

a. 0.0%

b. 4.0%

c. 8.0%

d. 12.0% <---Answer

e. 16.0%