TPP Inc., which owns and operates a chain of tattoo and piercing parlors, was founded 10 years ago. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated it plans to pay a $0.30 dividend 2 years from today, then to increase it at a relatively rapid rate for several years and then to increase it at a constant rate of 3.0% thereafter, as shown in the table below. Managements credibility with investors is high and it is believed the current price of the stock, $19, represents fair value i.e. the market is in equilibrium. What is the expected rate of return on the common stock?

Year	0	1	2	3	4	5	6	7	8
Growth Rates				40.0%	30.0%	20.0%	10.0%	6.5%	3.0%