You need to estimate the equity cost of capital for $xYZ$ Corp. You have the following data available regarding past returns: Data table

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 $10\%$ 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$)?$

a$.$ What was $xYZ\text{'}$s average historical return?

XYZ$\text{'}$s average historical return was $\%.($Round to one decimal place.$)$

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

The market's excess return for $2007$ was

$\%.($Round to the nearest integer.

The market's excess return for $2008$ was $\%.($Round to the nearest integer.

XYZ$\text{'}$s excess return for $2007$ was $\%.($Round to the nearest integer.$)$

XYZ$\text{'}$s excess return for $2008$ was $\%.($Round to the nearest integer.$)$

Estimate XYZ$\text{'}$s beta.

XYZ$\text{'}$s beta is $($Round to two decimal places.$)$

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

XYZ$\text{'}$s historical alpha was $\%.($Round to two decimal places.$)$

Data table

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