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Epsilon inc. has just paid a dividend of $3 per share, and it is expected to pay a dividend of $3.15 per share in one
Epsilon inc. has just paid a dividend of $3 per share, and it is expected to pay a dividend of $3.15 per share in one year's time. Assuming that required return is 13% and the dividend growth will continue at the same rate forever, what is the dividend yield and capital gains yield on Epsilon's shares?
a) 5%; 18%, respectively
b) 5%; 8%, respectively
c) 8%; 5%, respectively
d) 8%; 5%, respectively
e) There is insufficient information to answer this question.
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