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 $56. The stock will pay a dividend at year-end of $4.00. Assume that risk-free Treasury securities currently offer an interest rate of 1.9%.

Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2015 (figures in percent per year) are as follows.

PortfolioAverage Annual

Rate of Return (%)Average Premium (Extra return

versus Treasury bills) (%)

Treasury bills3.8

Treasury bonds5.31.5

Common stocks11.47.6

What is the discount rate on the stock?(Enter your answer as a percent rounded to 2 decimal places.)

What price should she be willing to pay for the stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places.)