Using the CAPM, determine the expected return on equity for a company. Given the risk-free rate is 3%, the expected market return is 9%, and the company’s beta is 1.2. Calculate the expected return on equity. Discuss how the CAPM model helps in estimating the cost of equity and its relevance in capital budgeting and corporate finance decisions. Explain the impact of changes in the risk-free rate, market return, and beta on the cost of equity. Analyze the limitations of CAPM and how it compares to other models like the Dividend Discount Model (DDM) and the Arbitrage Pricing Theory (APT). Discuss the strategic implications of using CAPM for investment decisions and valuation, particularly in assessing the risk-adjusted returns of different projects and investments.