Question1: You are analyzing Jillians 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

Question2: Reizenstein Technologies (RT) has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, RT is expected to experience a 18% annual growth rate for the next 5 years. By the end of 5 years, other firms will have developed comparable technology, and RTs growth rate will slow to 7% per year indefinitely. Stockholders require a return of 18% on RTs stock. The most recent annual dividend (D0), which was paid yesterday, was $1.50 per share.

Calculate the estimated intrinsic value of the stock today, P0.