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    SML Equation - Required Rate of Return

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    Millar Motors has a beta of 1.30 and an expected dividend growth rate of 5.00% per year. The T-bill rate is 3.00%, and the T-bond rate is 6.00%. The annual return on the stock market during the past 3 years was 15.00%. Investors expect the annual future stock market return to be 12.00%. Using the SML, what is Millar's required return?
    12.5%
    12.8%
    13.1%
    13.5%
    13.8%

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    https://brainmass.com/business/beta-and-required-return-of-a-project/sml-equation-required-rate-of-return-306089

    Solution Preview

    SML Equation

    Required Return on Stock = Risk free rate + ...

    Solution Summary

    The solution computes using the SML, Millar's required return.

    $2.19

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