An equity analyst at a pension fund is using an internal three-factor model to assess a potential investment in stock BBZ. Each of the three factors is represented by an exchange-traded fund (ETF) which has a factor beta of 1 to that factor and a factor beta of 0 to all other factors. The analyst prepares the following information:

Expected annual return of ETF factor	Factor P	Factor Q	Factor R
	5.40%	6.80%	3.00%
Factor beta for stock BBZ	0.95	-0.40	1.20

If the annualized risk-free interest rate is 2.10% and stock BBZ has an alpha of 0.50%, what is the expected annual return on stock BBZ using the internal model?