You work for Microsoft Corporation (ticker: MSFT), and you are considering whether to develop a new software product. The risk of the investment is the same as the risk of the company a using the data in Table 1 shown here and Table 2 shown here, calculate the cost of capital using the FF factor specification if the cument n-free rate is 2.9% per year b. Microsoft's CAPM beta over the same period was 0.87. What cost of capital would you estimate using CAPM? Table 1: Estimated Factor Betas, 2005-2015 XOM 0.78 0.62 0.21 0.32 GE 1.29 0.39 0.82 0.22 MSFT 1.01 0.47 0.15 0.04 Factor MKT SMB HML PR1YR Table 2: FFC Portfolio Average Monthly Returns, 1927-2015 Average Monthly Return (%) 0.68 0.25 0.44 0.73 95% Confidence Band (%) t 0.33 0.19 0.21 + 0.29 Factor Portfolio MKT-rf SMB HML PR1YR