Super Sounds is expecting a period of intense growth and is considering 2 options:

Option 1: Reduce the annual dividend by 20% a year for the next three years. After that, maintain a constant dividend of $1 a share. The company just paid $2.25 as the annual dividend per share.Hint: Reduced dividends can be interpreted as a negative growth rate.

Option 2: Do not pay dividends for the next two years and then pay a dividend of $0.90 at the end of year 3 for 2 years. Management predicts this option would then allow the dividends to grow at a rate of 7% forever

As a shareholder, if you require a return of 16% on your investments, which option would you prefer?