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 3%, and you expect the market's return to be 8%. 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? XYZ's average historical return was %. (Round to one decimal place.) Data Table - x b. Compute the market's and XYZ's excess retums for each year. The market's excess return for 2011 was %. (Round to the nearest integer.) The market's excess return for 2012 was %. (Round to the nearest integer.) (Click on the following icon e in order to copy its contents into a spreadsheet.) Year XYZ's excess return for 2011 was %. (Round to the nearest integer) Risk-free Return 3% 2011 2012 Market Return 6% - 37% XYZ Return 10% - 45% XYZ's excess return for 2012 was % (Round to the nearest integer) Estimate XYZ's beta Print Done XYZ's beta is. (Round to two decimal places.) Click to select your answer's). You need to estimate the equity cost of capital for XYZ Corp. You have the following data available regarding past returns: EE! 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 3%, and you expect the market's return to be 8%. 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.) Data Table X d. Suppose the current risk-free rate is 3%, and you expect the market's return to be 8 The expected return for XYZ Corp.'s stock was 1% (Round to two decimal places.) (Click on the following icon 0 in order to copy its contents into a spreadsheet.) e. Would you base your estimate of XYZ's equity cost of capital on your answer in part Risk-free Return Year 2011 2012 3% Market Return 6% 37% XYZ Return 10% - 45% 1% A. Part (d) because the CAPM provides a better estimate of expected returns. O B. Part(a) because the average past returns provides a better estimate of expect O C. Part (a) because the CAPM provides a better estimate of expected returns. O D. Part (d) because the average past returns provides a better estimate of expect Print Done Click to select your answer(S)