Eaton Electronic Company’s treasurer wants to compute the cost of common equity (also referred to as the required rate of return for common equity). Compute Ki (required rate of return on common equity). Assume: Year Cash Flow Rf 5% Km 10% Beta 1.2 a) What would be the best method to solve this problem? (Circle your answer) 1) Expected value calculation 2) Future value calculation 3) Capital asset pricing model (Kj = Rf + beta (Km – Rf) 4) Equity cost formula Ke = D1 / (P0 + g) b) Use the tool you selected above to solve the problem and state your answer.