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.