17 Use the information below to estimate the unlevered cost of equity for Contact Energy Complete all of the questions below by filling in your answers. Note: Please provide your answer in the format of X.XX. (1) On the previous day, the total market capitalisation of the top 10 largest companies listed on NZX is $60 billion. These companies returned $2.8 billion cash to their shareholders through cash dividend and repurchase in the last year. The long-term annual growth rate is estimated at 4%. The expected return to the market portfolio implied by these data is %. (2) Now, disregard your answer to part (1). Assume an expected market return of 6% and a risk free rate of 1.1%. The implied market risk premium is % (3) Disregard your answers to parts (1) and (2). Assume a debt beta of 0.2 and a net debt to capital ratio of 0.25 for Contact Energy. Net debt to capital ratio = net debt / (net debt + market value of equity). Assume a risk free rate of 1.1% and a market risk premium of 5%. Regression results from regressing 120-month stock returns of Contact Energy on the returns to NZX50 is provided in the table below: SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted RSquare Standard Error Observations 0.47 0.22 0.21 0.05 120 ANOVA df SS MS F 32.62 Significance F 0.00 Regression Residual Total 1 118 119 0.09 0.31 0.40 0.09 0.00 Intercept X Variable 1 Coefficients Standard Error -0.0008 0.01 0.91 0.16 t Stat -0.16 5.71 P-value 0.87 0.00 Lower 95% Upper 95% Lower 95.0% Upper 95.0% -0.01 0.01 -0.01 0.01 0.59 1.22 0.59 1.22 Contact Energy has: An equity beta of An asset beta of Assume perfect capital markets. If contact energy issue shares to raise cash and pay down all debt, its cost of equity is %