Potter Co. 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 three years was 15.00%. Investors expect the annual future stock market return to be 12.00%. Using the SML, what is ABCs required return?

a.

13.1%

b.

12.8%

c.

13.8%

d.

13.5%

How would this be solved WITHOUT excel?