Constant Growth Stock Valuation You are analyzing Jillian's Jewellery (IJ) stock for a possible purchase. JJ just paid a dividend of $1.50 yesterday. You expect the dividend to grow at the rate of 6% per year for the next 3 years; if you buy the stock, you plan to hold it for 3 years and then sell it. 1. What dividends do you expect for JJ stock over the next 3 years? In other words, calculate D1, D2 and D3. (0.5 mark) 2. J's stock has a required return of 13% and so this is the rate you'll use to discount dividends. Find the present value of the dividend stream; that is, calculate the PV of D1, D2 and D3, and then sum these PVs. (0.5 mark) 3. J stock should trade for $27.053 years from now (i.e., you expect P3=27.05 ). Discounted at a 13% rate, what is the present value of this expected future stock price? In other words, calculate the PV of \$27.05. (0.5 mark) 4. Use the constant growth model to calculate the present value of this stock. Assume that G=6% and is constant. ( 0.5 mark) 5. Is the value of this stock dependent on how long you plan to hold it? In other words, if your planned holding period were 2 years or 5 years rather than 3 years, would this affect the value of the stock today, P0? Explain your answer ( 200 words minimum). ( 3 mark)