A firm reported earnings per share of $2.40 in 2020, and paid dividends per share of $1.06. The earnings had grown 7.5% a year over the prior five years. The stock had a beta of 1.05 and traded for 10 times earnings. The Treasury bond rate is 5%, and the risk premium is 5.5%. What long- term growth rate is implied in the firm's current PE ratio (pick the closest answer)?

5.75 %

6.09 %

7.14 %

8 %

ANSWER IS 6.09%