Jenny just paid $16 today to buy a share of XYZ. Jenny forecasts that a dividend of $0.60 will be paid a year from now. Consider the following three possible scenarios for the share's price exactly 1 year from now (immediately after the dividend payment): (i) Scenario 1: the share price is exactly analyst l's estimated instrinsic value (i.e., $20) with a probability of 60%. (ii) Scenario 2: the share price remains the same at $16 with a probability of 15%. (iii) Scenario 3: the share price is exactly analyst 2's estimated intrinsic value (i.e., the answer in part (b)) with a probability of 25%. (d) Calculate the expected return for Jenny if she holds stock XYZ for 1 year under the assumptions stated above. (5 marks) Question 3 (10 Marks) Two analysts are given the task to estimate the intrinsic value of firm XYZ. Analyst 1 uses a dividend discount model (DDM) with a constant growth rate of 4% per annum and a required rate of return of 8% per annum. According to his estimation, XYZ's intrinsic value is $20. (a) Calculate the expected dividend per share (according to analyst l's estimation) to be paid by firm XYZ a year from now. (2 marks) Analyst 2 estimates that shareholders of firm XYZ will only receive the expected dividend per share found in part (a) in 5 years' time (instead of 1 year). She also uses a constant DDM with a higher assumed growth rate of 6% per annum and a required return of 10% per annum. (b) Calculate the intrinsic value of firm XYZ according to analyst 2's estimation