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XYZ Inc. has expected earnings over the next year of $2/share (E1=2). the company is expected to maintain an earnings retention rate of 40%, i.e.,

XYZ Inc. has expected earnings over the next year of $2/share (E1=2). the company is expected to maintain an earnings retention rate of 40%, i.e., 60% of earnings are expected to be [aid out as dividends every year. The company has a beta of 1.5, the risk-free rate is 4%, and the market risk premium is also 4%. If the growth rate in earnings is expected to be 5% in perpetuity, what's the expected holding period return over the next year? How much of the return is due to capital gains (price appreciation = P1/P0 - 1) and how much s attribute to dividend yield (D1/P0)

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