Company XYZ is a public company. The XYZ stock just paid $2 cash dividend per share. Analysts forecast that the stocks dividends will grow at a high annual rate of 5% for the next two years before the growth rate drops to the long-term level 2% forever. The yield of Treasury bonds is currently 3% and the long-term return of S&P 500 is 8%. The beta of the XYZ stock is 1.4. The current price of the XYZ stock is per share.

Investors required rate of return on the XYZ stock should be ______.

Group of answer choices

3%

7%

8%

10%