Steve's Specialties, Inc. paid its dividend yesterday, which as $ 2.25. The dividend has been growing at a rate of 0.020 and is expected to continue indefinitely at that rate. Steve's common stock is currently trading at 24.00 per share. The firm's beta is 1.03. Treasuries (T-bills) are currently yielding 0.030, Average return on the market is 0.09.

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