Steve's Specialties Inc. paid its dividend yesterday, which was $1.25. The dividend has been growing at a rate of 0.035 and is expected to continue indefinitely at that rate. Steve's common stock is currently trading at 23.00 per share. The firm's beta is 0.90. Treasuries (T-bills) are currently yielding 0.035, Average return on the market is 0.13. Using the CAPM, what is Steve's cost of retained earnings?