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Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 5 0 0 will sell at year

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 $58. The stock will pay a dividend at year-end of $3.00. Assume that risk-free Treasury securities currently offer an interest rate of 1.7%.
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 5.41.7
Common stocks 11.57.7
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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