QUESTION $26$

Nagel Equipment has a beta of $0\mathrm{.}88$ and an expected dividend growth rate of $4\mathrm{.}00\%$ per year. The T$-$bill rate is $3\mathrm{.}50\%,$ and the T$-$bond rate is $5\mathrm{.}25\%.$ The annual return on the stock market during the past $4$ years was $10\mathrm{.}50\%.$ Investors expect the average annual future return on the market to be $12\mathrm{.}50\%.$ Using the SML$,$ what is the firm's required rate of return? Do not round your intermediate calculations.

a$.11\mathrm{.}48\%$

b$.12\mathrm{.}07\%$

c$.10\mathrm{.}50\%$

d$.11\mathrm{.}63\%$

e$.12\mathrm{.}91\%$