For example, you could use inputs (i.e., assumptions) that would produce an EPS growth rate of 8 percent, which would be closer to the median IBES forecast. Another approach to estimating the cost of equity is the Capital Asset Pricing Model (CAPM) method. Tony notes that most firms in SDI’s industry have betas in the neighborhood of 1.1 to 1.3. He does not have a beta for SDI, but in a note Tony stated that you might use the following data to calculate one: