# write about the home Depot Required rate of return and use CAPM model?

write about the home Depot Required rate of return and use CAPM model?use the following example : The market capitalization rate or required rate of return for Teradyne, Inc. was calculated using the CAPM model which assumes that stock market prices are at equilibrium levels. In the CAPM model, the required rate of return is calculated by the formula k = rf + Beta (MRP). MRP is the market risk premium that may vary with individual companies. The following values were used for this calculation: beta = 2.16 ; rf = 0.18% (one year Treasury bill); MRP = 5.7 (commonly used in academia). MRP = Rm – Rf =5.7, therefore Rm = 5.88%. You should match the term of the risk-free rate to the term of Rf. These are estimated numbers for the future and the best way to arrive at a guesstimate is to look at recent history and think about what fundamentals are likely to affect them going forward. U.S. equity markets have sustained major ups and downs in recent years, but the returns in both 1-year and 10-year periods have been nearly 0%. Therefore: k = R(rf) + MRP x Beta = 0.18% + 5.7 x 2.16 = 12.5%. This analysis used a one year horizon because of future economic uncertainties.

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