Task #$3($CAPM and the equity cost of capital$)$ You need to estimate the equity cost

of capital for XYZ Corp. You have the following data available regarding past returns:

a$)$ What was XYZ$\text{'}$s average historical return?

b$)$ Compute the market's and XYZ$\text{'}$s excess returns for each year. Estimate XYZ$\text{'}$s beta.

c$)$ Estimate XYZ$\text{'}$s historical alpha.

d$)$ Suppose the current risk$-$free rate is $3\%,$ and you expect the market's return to be $8\%.$

Use the CAPM to estimate an expected return for XYZ Corp.$\text{'}$s stock.

e$)$ Would you base your estimate of XYZ$\text{'}$s equity cost of capital on your answer in part $($a$)$

or in part $($d$)?$ How does your answer to part $($c$)$ affect your estimate? Explain.