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's average historical return? b. Compute the market's and XYZ's excess retums for each year. Estimate XYZ's beta. c. Estimate XYZ's historical alpha d. Suppose the current risk-free rate is 2%, and you expect the market's return to be 6%. Use the CAPM to estimate an expected return for XYZ Corp.'s stock. e. Would you base your estimate of XYZ's equity cost of capital on your answer in part (a) or in part (d)? a. What was XYZ's average historical retum? Data Table X XYZ's average historical retum was % (Round to one decimal place) b. Compute the market's and XYZ's excess retums for each year. The market's excess return for 2011 was (Click on the following icon 3 in order to copy its contents into a spreadsheet) %. (Round to the nearest integer.) The market's excess return for 2012 was 1% (Round to the nearest integer.) [%. (Round to the nearest integer.) XYZ's excess return for 2012 was%. (Round to the nearest integer) Year 2011 2012 Risk-free Return 3% 1% Market Retur 7% - 34% XYZ Return 11% - 52% XYZ's excess return for 2011 was Print Done Estimate XYZ's beta. XYZ's beta is. (Round to two decimal places.) Click to select your answers) You need to estimate the equity cost of capital for XYZ Corp. You have the following data available regarding past returns: E a. What was XYZ's average historical return? b. Compute the market's and XYZ's excess retums for each year. Estimate XYZ's beta c. Estimate XYZ's historical alpha. d. Suppose the current risk-free rate is 2%, and you expect the market's return to be 6%. Use the CAPM to estimate an expected return for XYZ Corp.'s stock. e. Would you base your estimate of XYZ's equity cost of capital on your answer in part (a) or in part (d)? c. Estimate XYZ's historical alpha. XYZ's historical alpha was % (Round to one decimal place ) d. Suppose the current risk-free rate is 2%, and you expect the market's return to be 6%. Use the CAPM to estimate an expected return for XYZ Corp.'s stock. The expected return for XYZ Corp.'s stock was %. (Round to two decimal places.) 1 Data Table - X e. Would you base your estimate of XYZ's equity cost of capital on your answer in part (a) or in part (d)? ( (Click on the following icon o in order to copy its contents into a spreadsheet.) O A. Part (d) because the CAPM provides a better estimate of expected returns. OB. Part (d) because the average past returns provides a better estimate of expected returns O C. Part (a) because the CAPM provides a better estimate of expected returns. OD. Part (a) because the average past returns provides a better estimate of expected returns Year 2011 2012 Risk-free Return 3% 1% Market Return 7% - 34% XYZ Return 11% - 52% Click to select your answer(s). Print Done