Using a dividend model, the required return on Fake Company Mu $($FCM$)$ stock is determined to be about $8\mathrm{.}2\%.$ Smartly, FCM$\text{'}$s CFO doesn't like relying on just one model, so she asks you to come up with a second view of required return.

You gather the following information. What is you alternative estimate of the company's common stock required return?

return on $7-$year Treasury note $=1\mathrm{.}82\%$

return on $60-$day Treasury bill $=1\mathrm{.}61\%$

current $12-$month return on the S&P $500=4\mathrm{.}5\%$

FCM stock beta $=1\mathrm{.}2$

average beta of major competitors $=1\mathrm{.}45$

$5-$year return on the S&P $500=9\mathrm{.}4\%$