A company's ordinary shares are currently trading at ₦18.00 on the Nigerian Exchange Group. The company just paid a dividend of ₦1.20 per share, and dividends are expected to grow at a constant rate of 8% per annum. Using the Gordon Growth Model, what is the required rate of return on the shares?

The Gordon Growth Model states: $P_0 = \frac{D_1}{r - g}$, where $D_1$ is the next expected dividend, $r$ is the required return, and $g$ is the growth rate. $D_1 = ₦1.20 \times 1.08 = ₦1.296$. Rearranging: $r = \frac{D_1}{P_0} + g = \frac{1.296}{18.00} + 0.08 = 0.072 + 0.08 = 0.1520$. Wait — this gives 15.20%. Re-checking: $r = (1.296/18) + 0.08 = 0.072 + 0.08 = 15.20%$. Therefore the correct answer is B (15.20%), as the dividend yield on $D_1$ is 7.2% plus growth of 8% equals 15.20%.