You need to estimate the equily cost of capital for XYZ Corp. 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 $2\%,$ and you expect the market's return to be $9\%.$ 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$)?$

Data table

$($Click on the following icon in order to copy its contents into a spreadsheet$)$