Determine the length of time that is under evaluation. If the length of time is one year or less, then the most comparable government securities are Treasury bills. Go to the Treasury Direct website and look for the Treasury bill quote that is most current. For example, if it is 0.204, then the risk free rate is 0.2 percent. One use of the RATE function is to calculate the periodic interest rate when the amount, number of payment periods, and payment amount are known. For this example, we want to calculate the interest rate for $5000 loan, and with 60 payments of $93.22 each. Required Rate of Return = Risk-Free Rate + Beta * (Whole Market Return – Risk-Free Rate) Dividend Discount Model: On the other hand, the following steps help in calculating the required rate of return by using the alternate method. This model is only applicable when a company has a stable dividend per stock rate.