Suppose the risk-free interest rate is 2% and the market risk premium is 6%. A company, NZ1, has a beta of 1. The dividend per share of $2 was just paid to the investors. The dividend growth is 5% per year in the next two years and 4% per year for all years after that. The retention percentage rate is 60%. The stock is fairly priced.

a. What is the expected return of NZ1 stock using the CAPM?