You are currently considering an investment in a project in the energy sector. The investment...
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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 the accompanying tables, calculate the cost of capital using the FFC factor specification if the current risk-free rate is 2.7% per year. Estimated Factor Betas Factor MKT SMB HML PR1YR MSFT 1.101 -0.714 -0.01 0.021 XOM 0.663 -0.381 0.168 0.21 GE 1.216 -0.292 0.783 -0.173 Factor Portfolio MKT -rf FFC Portfolio Average Monthly Returns, 1927-2018 Average Monthly Return (%) 0.663 0.222 0.379 0.657 SMB HML PR1YR 95% Confidence Band (%) +0.32 + 0.19 + 0.21 + 0.28 The cost of capital using the FFC factor specification is %. . (Round to two decimal places.)
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