# SML Equation - Required Rate of Return

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%

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