Dallas Home Supply paid an annual dividend of $2.40 a share last year. Yesterday, the firm announced the dividend will increase next year by 10% and will stop increasing for 2 years (i.e., stay at the increased level for years 2 and 3) and then starting in year 4, the dividends will increase by 2%. The 2% increase will continue forever. If the required return on this stock is 12 percent, what is the current price of the stock?

$25.51

$26.02

$26.08

$26.84