Estimating Cost of Capital using APT Suppose you found the following list of factors and their betas and premiums using regression analysis. Factor: Factor Risk Premium Factor betas for company A Term structure 0.425 1.0615 Interest rates 0.051 -2.4167 Exchange rates -0.049 1.3235 Business cycle 0.041 1.292 -0.069 Inflation -0.5220 0.3046 Other macro 0.530 How can we estimate the company A's cost of capital, when the risk free rate is 0.05%?! Estimating Cost of Capital using APT Suppose you found the following list of factors and their betas and premiums using regression analysis. Factor: Factor Risk Premium Factor betas for company A Term structure 0.425 1.0615 Interest rates 0.051 -2.4167 Exchange rates -0.049 1.3235 Business cycle 0.041 1.292 -0.069 Inflation -0.5220 0.3046 Other macro 0.530 How can we estimate the company A's cost of capital, when the risk free rate is 0.05%