Value of a Stock Using Gordon Growth Model

XYZ Corporation pays an annual dividend and is expected to grow its dividend at a constant rate of 5% per year indefinitely. If the required rate of return on the stock is 10%, what is the value of the stock based on the Gordon Growth Model?

Assume that the most recent dividend paid (D0) was $2.00. Calculate the stock's value using the formula:

Value = D1 / (r - g)

where D1 is the expected dividend next year, r is the required rate of return, and g is the growth rate.