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 13.11 and in the table 2, calculate the cost of capital using the FFC factor specification if the current risk-free rate is 3.3% per year. b. Microsoft's CAPM beta over the same time period was 0.91. What cost of capital would you estimate using the CAPM? a. Using the data in Table 13.13 and in the table 4, calculate the cost of capital using the FFC factor specification if the current risk-free rate is 3.3% per year. The cost of capital using the FFC factor specification is \%. (Round to two decimal places.) b. Microsoft's CAPM beta over the same period was 0.91. What cost of capital would you estimate using CAPM? The cost of capital using the CAPM is \%. (Round to two decimal places.) 1: Data Table (Click on the following icon 2: Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) 3: Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) \begin{tabular}{lrrr} \multicolumn{4}{c}{ Estimated Factor Betas, 2007-2017 } \\ \hline Factor & MSFT & XOM & \multicolumn{1}{c}{ GE } \\ \hline MKT & 1.12 & 0.66 & 1.22 \\ SMB & 0.68 & 0.38 & 0.29 \\ HML & 0.04 & 0.17 & 0.78 \\ PR1YR & 0.06 & 0.21 & 0.17 \\ \hline \end{tabular} 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 13.11 and in the table 2, calculate the cost of capital using the FFC factor specification if the current risk-free rate is 3.3% per year. b. Microsoft's CAPM beta over the same time period was 0.91. What cost of capital would you estimate using the CAPM? a. Using the data in Table 13.13 and in the table 4, calculate the cost of capital using the FFC factor specification if the current risk-free rate is 3.3% per year. The cost of capital using the FFC factor specification is \%. (Round to two decimal places.) b. Microsoft's CAPM beta over the same period was 0.91. What cost of capital would you estimate using CAPM? The cost of capital using the CAPM is \%. (Round to two decimal places.) 1: Data Table (Click on the following icon 2: Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) 3: Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) \begin{tabular}{lrrr} \multicolumn{4}{c}{ Estimated Factor Betas, 2007-2017 } \\ \hline Factor & MSFT & XOM & \multicolumn{1}{c}{ GE } \\ \hline MKT & 1.12 & 0.66 & 1.22 \\ SMB & 0.68 & 0.38 & 0.29 \\ HML & 0.04 & 0.17 & 0.78 \\ PR1YR & 0.06 & 0.21 & 0.17 \\ \hline \end{tabular}