Assume you expect a company's net income to remain stable at $$2,000$ for all future years, and you expect all earnings to be distributed to stockholders at

the end of each year, so that common equity also remains stable for all future years $($assumes clean surplus$).$ Also, assume the company's $=1\mathrm{.}5,$ the

market risk premium is $6\%$ and the $20-$year yield on risk free treasury bonds is $2\%.$

a$.$ Use the CAPM to estimate the company's equity cost of capital.