Shares in ABC Ltd currently trade at $28.00 and pays can annual dividend. Shareholders expect a return of 12%p.a. The dividend yield (based on last week dividend /price i.e D0/P0) is 5% p.a, and is expected to grow at a constant rate in perpetuity. The expected growth rate, according to the dividend discount model (DDM) is closest to:

Select one:

A. 6.7% p.a.

B. 5.0% p.a.

C. 7.0% p.a.

D. 5.4% p.a.