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 $43. The stock will pay a dividend at year-end of $3.00. 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.

PortfolioAverage Annual Rate of Return (%)Average Premium (Extra return versus Treasury bills) (%)Treasury bills3.7 Treasury bonds5.41.7Common stocks11.57.7

1.) What is the discount rate on the stock?

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

2.) 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.