Problem:
Yesterday BrandMart Supplies paid its common stockholders a dividend equal to $3 per share. BrandMart expects to pay a $5 per share one year from today. After the $5 dividend is paid, the company expects its growth rate will remain constant at 4 percent per year forever.
Required:
Question: If BrandMart's investors demand a 12 percent rate of return, what should be the current market price of the company's stock?
Note: Please show how you came up with the solution.