Problem:
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).
Required:
Question 1: Calculate the cost of capital using the FFC factor specification if the current risk-free rate is 5% per year. Please give a detailed answer
Note: Please provide full description.
|
Factor
|
XOM
|
|
MKT
|
0.60
|
0.808
|
|
SMB
|
0.25
|
-0.812
|
|
HML
|
0.35
|
0.196
|
|
PR1YR
|
0.70
|
0.376
|