Problem:
Zeta Corporation just paid a $2.00 dividend. Analysts believe that Zeta Corporation's dividend will grow by 20% next year, and then settle into a constant growth regime at 5% per year into the future. If investors assign a required rate of return of 12% to Zeta's stock, what should the stock sell for today?
a) $30
b) $32.14
c) $34.29
d) $36.00
Note: Please show how you came up with the solution.