Smiley Inc. plans to sell it's business and has used capitalization of earnings as a valuation method with a stable cash flows of P2Million for the last 5 years. Forecast shows that similar level of cash flow would continue in the next several years. With the stability of business, it was sold to Angry Bird Inc. for P8Million inclusive of premium amounting to P1Million. Note that Smiley Inc. annual operating expenses is P750k. Compute for the capitalization rate or the required rate of return used by Smiley Inc