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Steve's Specialties, Inc. paid its dividend yesterday, which as $ 3.00. The dividend has been growing...

Steve's Specialties, Inc. paid its dividend yesterday, which as $ 3.00. The dividend has been growing at a rate of 0.040 and is expected to continue indefinitely at that rate. Steve's common stock is currently trading at 22.00 per share. The firms beta is 0.86.

Treasuries (T-bills) are currently yielding 0.020,

Average return on the market is 0.13.

Using the CAPM, what is Steve's cost of retained earnings?

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