Business Solutions,Inc.is expected to pay its first annual dividend of $1.00 per share three years from now.Starting in year 6,the company is expected to start increasing the dividend by 2 percent per year.What is the value of this stock today at a required return of 12 percent?

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P₅ = ($1.00 × 1.02)/(0.12 - 0.02) = $10.20; P₀ = [$1.00/1.12³] + [$1.00/1.12⁴] + [($1.00 + $10.20)/1.12⁵] = $7.70