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Please help need an answer soon. Will upvote kindly. Top hedge fund manager Sally Buffit believes that a stock with the same market risk as

Please help need an answer soon. Will upvote kindly.

Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $57. The stock will pay a dividend at year-end of $2.00. Assume that risk-free Treasury securities currently offer an interest rate of 1.8%.

Average rates of return on Treasury bills, government bonds, and common stocks, 19002020 (figures in percent per year) are as follows.

Portfolio Average Annual Rate of Return (%) Average Premium (Extra return versus Treasury bills) (%)
Treasury bills 3.7
Treasury bonds 5.4 1.7
Common stocks 11.5 7.7

What is the discount rate on the stock?

Note: Enter your answer as a percent rounded to 2 decimal places.

What price should she be willing to pay for the stock today?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

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