Hi I just have a quick question about these type of questions. How do you know whether to do:

2/(0.12-0.04)=$25

2(1.04)/(0.12-0.04)=$26

I am unsure about which approach you would take in this question I guessed $25. Could someone please let me know when to do which method. I think it's to do with when the dividend is going to be paid.

Thanks

AA Co. has forecasted its next dividend (to be paid in one year) to be $2.00 per share. It is expected that dividends will grow at 4% indefinitely. Assuming a discount rate of 12%, what is the current price of AA Co.? $16.66 $26.00 $20.00 $25.00