Table 1 Estimated Factor Betas, 2005 2015 Factor MSFT XOM GE MKT 1 06 0 780 78 1 29 SMB minus0 45 negative 0 640 64 minus0 39 HML minus0 12 0 240 24 0 82 PR1YR minus0 06 0 370 37 minus0 22 Table 2 FFC Portfolio Average Monthly Returns, 1927 2015 Factor Portfolio Average Monthly Return ( ) 95 Confidence Band ( ) MKT minus r Subscript f nbspMKT rf 0 690 69 plus or minus0 33 SMB 0 210 21 plus or minus0 19 HML 0 340 34 plus or minus0 21 PR1YR 0 640 64 plus or minus0 29 You are currently considering an investment in a project in the energy sector The investment has the same riskiness as Exxon Mobil stock (ticker XOM) Using the data in Table 1 shown here, LOADING , and Table 2 shown here, LOADING , calculate the cost of capital using the FFC factor specification if the current risk free rate is 3 2 3 2 per year The cost of capital using the FFC factor specification is nothing (Round to two decimal places )

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Question: Table 1: Estimated Factor Betas, 2005-2015 Factor MSFT XOM GE MKT 1.06 0.780.78 1.29 SMB minus0.45 negative 0.640.64 minus0.39 HML minus0.12 0.240.24 0.82 PR1YR minus0.06

Table 1: Estimated Factor Betas, 2005-2015

Factor

MSFT

XOM

MKT

1.06

0.780.78

1.29

SMB

minus0.45

negative 0.640.64

minus0.39

HML

minus0.12

0.240.24

0.82

PR1YR

minus0.06

0.370.37

minus0.22

Table 2: FFC Portfolio Average Monthly Returns, 1927-2015
Factor Portfolio	Average Monthly Return (%)	95% Confidence Band (%)
MKT minus r Subscript f nbspMKTrf	0.690.69	plus or minus0.33
SMB	0.210.21	plus or minus0.19
HML	0.340.34	plus or minus0.21
PR1YR	0.640.64	plus or minus0.29

You are currently considering an investment in a project in the energy sector. The investment has the same riskiness as Exxon Mobil stock (ticker: XOM). Using the data in Table 1 shown here,

, and Table 2 shown here,

, calculate the cost of capital using the FFC factor specification if the current risk-free rate is

3.2 %3.2%

per year.

The cost of capital using the FFC factor specification is

nothing%.

(Round to two decimal places.)

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