Using the Gordon growth model, next year’s dividend is Rs. 6, the required return is 12% and growth is 4%. The share price is:

A. Rs. 50
B. Rs. 75
C. Rs. 37.5
D. Rs. 150
Correct Answer: B. Rs. 75

P0 = D1 / (r - g) = 6 / (0.12 - 0.04) = Rs. 75.

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