Companys interest rate is 10%, and its tax rate is 35% with a long-term expected annual growth rate of 4%. The Companys total notes payable is $5,000,000, and its total stockholders equity (book) is $7,000,000. The market value of equity equals twice its total debt. Capitalization rates are founded on which principle?

The principle of supply and demand.

The principle of alternatives.

The principle of substitution.

The principle of future benefits.