The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of XYZ Company has a beta coefficient of 1.2. XYZ plowback 60% of its earnings, and the latest earnings announced were $10 per share. Dividends were just paid and are expected to be paid annually. You expect that XYZ will earn an ROE of 20% per year on all reinvested earnings forever.

5. The required return on XYZ stock based on CAPM is