Question: Hello, Can I get help solving? You are analyzing Jillian's Jewlery (JJ) stock for a possible purchase. JJ just paid a dividend of $2.25 yesterday.

Hello,

Can I get help solving?

You are analyzing Jillian's Jewlery (JJ) stock for a possible purchase. JJ just paid a dividend of $2.25 yesterday. You expect the dividend to grow at the rate of 5% per year for the next 3 years; if you buy the stock, you plan to hold it for 3 years and then sell it.

JJ stock should trade for $25.00 3 years from now (i.e., you expect P3^ = $25.00). Discounted at a 15% rate, what is the present value of this expected future stock price? In other words, calculate the PV of $25.00.

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