A firm is considering the purchase of an expensive piece of equipment. They plan to use the Net Present Value method to determine whether or not to accept the project. They have the following information available:

- The current capital structure for the company is 45% debt and 55% equity.

- The YTM on the company's outstanding bonds is 4.8%.

- Last year's dividend was $1.20; the price of the company's stock is currently $80, andthe expected growth rate of the dividend is 3%.

Management is trying to determine the appropriate required return to use in the NPV calculation. Which method would be most appropriate?