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?