Royal Bank common shares pay dividends annually. They just paid a$1.50 dividend. Stock holders require a return of12%. Royal is expected to continue paying dividends that will grow at3.5% per annum in perpetuity. What is the fair price of a share of Royal Bankstock?

A.

$18.90

B.

$17.65

C.

$16.72

D.

$18.26

E.

$12.50