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Question 3 1 pts LED, Inc. just paid an annual dividend of $2.50 per share. The dividends are expected to grow for the next 3
Question 3 1 pts LED, Inc. just paid an annual dividend of $2.50 per share. The dividends are expected to grow for the next 3 years at 8% per year, then grow at 3% per year forever. The required rate of return for LED stock is 12% per year. If you purchased the share of LED at time 2, at the price you calculated in #2, and held it for one year, what should the return on investing in LED stock be? What portion of that return comes from dividends, and what portion from capital gain? Return = 12%; Portion from dividends = 9%; Portion from capital gain = 3% Return = 13%; Portion from dividends = 5%; Portion from capital gain = 8% Return = 14%; Portion from dividends = 12%; Portion from capital gain = 2% O Return = 15%; Portion from dividends = 6%; Portion from capital gain = 9%
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