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?

Applying the Gordon Growth Model: $r = \frac{D_1}{P_0} + g$. The next dividend $D_1 = ₦1.20 \times 1.08 = ₦1.296$. Therefore $r = \frac{₦1.296}{₦18.00} + 0.08 = 0.072 + 0.08 = 0.152 = 15.20\%$. Option A uses $D_0$ instead of $D_1$ in the numerator (1.20/18 + 0.08 = 14.67%), which is a common error. Option B correctly uses the forward dividend $D_1$.