5. Refer to the information below:

	Company A in Malaysia	Proxy in Singapore
Equity beta	1.25	1.03
Debt beta	0.01	0.02
Debt to equity ratio	150%	67%
Risk Free rate of return	2%	3%
Market risk return	7%	8%
Interest rate	3%	4%

As Company A is going to invest in a different business in Singapore, it would like to know the ungeared cost of equity of the new business in Singapore. Calculate the Singapore ungeared cost of equity. (Why For Company A in Singapore, the ungeared cost of equity would be: 2% + 1.03 * (8% - 2%) = 9.24%)

6. The 5-year investment requires an initial cost of SGD1 billion with zero scrap value. It requires initial working capital of SGD400 million and it is expected to increase by 4% each year and will be recovered at the end of the project. The project is able to generate after-tax cash flows of SGD380 million per annum. The tax allowable depreciation is using straight line basis. 40% of the initial cost is subject to tax allowable depreciation. Tax rate is 25%. The spot exchange rate is MYR3.25: SGD1. Calculate the base case NPV in MYR by discounting SGD cash flows based on the discount factor calculated in the previous question.