Granite Construction is a public company, traded on NASDAQ.

Granite is considering investing in a new project and wishes to calculate its cost of equity capital.

To do that, Granite is going to use the CAPM.

Below you will find historical monthly returns on Granite and the S&P 500.The current yield on 10-year treasuries is 2%.

Assume that the market risk premium is 6%. What is the cost of equity capital of Granite?

Historical Returns (monthly) of Granite and the S&P 500
Month end	Granite	S&P 500
20140131	-4.8%	-3.6%
20140228	10.4%	4.3%
20140331	9.0%	0.7%
20140430	-6.4%	0.6%
20140530	-5.0%	2.1%
20140630	1.7%	1.9%
20140731	-9.5%	-1.5%
20140829	8.4%	3.8%
20140930	-9.4%	-1.6%
20141031	16.0%	2.3%
20141128	-2.9%	2.5%
20141231	6.4%	-0.4%
20150130	-10.4%	-3.1%
20150227	-2.8%	5.5%
20150331	6.5%	-1.7%
20150430	-1.2%	0.9%
20150529	3.3%	1.0%
20150630	-0.6%	-2.1%
20150731	-4.2%	2.0%
20150831	1.4%	-6.3%
20150930	-13.6%	-2.6%
20151030	10.7%	8.3%
20151130	24.1%	0.1%
20151231	5.6%	-1.8%
20160129	-10.0%	-5.1%
20160229	7.3%	-0.4%
20160331	15.6%	6.6%
20160429	-6.7%	0.3%
20160531	-3.7%	1.5%
20160630	6.4%	0.1%
20160729	9.3%	3.6%
20160831	-3.6%	-0.1%
20160930	3.9%	-0.1%
20161031	-1.2%	-1.9%
20161130	20.0%	3.4%
20161230	-6.5%	1.8%
20170131	2.1%	1.8%
20170228	-5.6%	3.7%
20170331	-5.1%	0.0%
20170428	5.0%	0.9%
20170531	-11.1%	1.2%
20170630	3.2%	0.5%
20170731	1.6%	1.9%
20170831	12.7%	0.1%
20170929	5.2%	1.9%
20171031	9.9%	2.2%
20171130	4.2%	2.8%
20171229	-4.2%	1.0%
20180131	5.1%	5.6%
20180228	-12.9%	-3.9%
20180329	-3.6%	-2.7%
20180430	-6.2%	0.3%
20180531	8.6%	2.2%
20180629	-1.9%	0.5%
20180731	-3.1%	3.6%
20180831	-15.3%	3.0%
20180928	0.3%	0.4%
20181031	0.0%	-6.9%
20181130	10.7%	1.8%
20181231	-20.2%	-9.2%