Nagel Equipment has a beta of 0.88 and an expected dividend growth rate of 4.00% per year. The T-bond rate is 5.25%. The annual return on the stock market during the past 4 years was 10.25%. Investors expect the average annual future return on the market to be 15.00%. Using the SML, what is the firm's required rate of return? If the expected return of the stock of Nagel Equipment is 16%, how will you take advantage of the expected future path of the stock? Illustrate graphically and explain clearly your decision.