The Kosten Warenhaus just paid a dividend of $2.00 (D₀ = $2.00) per share, and that dividend is expected to grow at a constant rate of 4.50% per year in the future. The companys beta is 0.69, the market return is 11.5%, and the risk-free rate is 2.50%.

1. What is the required return on the stock, r_s? [Hint: r_s =r_rf + b(r_m r_rf)]

2. What is the companys current stock price?