6. (10 pt) In this question, we discuss estimation of market risk premium (MRP), an important component of the CAPM model. CAPM is often used to help us estimate a firm's cost of equity. (i) (5 pt) The S&P 500 index is currently trading at $3000. The dividend of the index is estimated to be $60 for next year with a long-term growth rate of 3% per year. The risk-free rate is 1.5%. Estimate (a) the expected market return (RM) and (b) market risk premium (MRP) using the dividend discount (DDM) model. (ii) (5 pt) On the other hand, the MRP based on the average return of the S&P 500 over the past 30 years is 6%. Discuss when you would prefer the MRP estimate from the DDM method over that from the historical method when you have to estimate cost of equity in capital budgeting