Biocom is a pharmaceutical company that currently has earnings of $100 million per year before interest and taxes. These earnings are expected to continue for the next five years. After five years, one of Biocom's drug patents will expire and its annual earnings are expected to drop to $50 million in the sixth year. Earnings are expected to continue at this level in perpetuity. The market value of Biocom's total debt is $500 million and it pays 8% annual interest on this debt. It has 10 million shares outstanding and its equity is currently valued at $15.23 per share. Biocom's annual stock returns have a CAPM beta of 1.25 and a variance of 0.862. Suppose that the assumptions of the CAPM hold and that individuals can borrow at the same rate as corporations. The expected return on the market portfolio of risky assets 0.13 and the risk free rate of interest 0.05. The corporate rate is 35%. Compute the expected annual return on Biocom stock. Would a rational investor hold Biocom stock as a part of her portfolio