Required rate of return examples
Step 4: Finally, the required rate of return is calculated by adding the risk-free rate to the product of beta and market risk premium (step 2) as given below, Required rate of return formula = Risk-free rate of return + β * (Market rate of return – Risk-free rate of return) Examples of Required Rate of Return Formula (with Excel Template) In this case, the investor’s required rate of return would be 5%. Required Rate of Return Example. For example, Joey works for himself as a professional stock investor. Because he is highly analytical, this work perfectly fits him. Joey prides himself on his ability to evaluate where the market is and where it will be.