1. Mr. Hazizan, is a Financial Manager for Muafa Coffee Valley Sdn. Bhd. He has been working for the company since the year 2000. The company is considering on opening a new branch located in Subang, Shah Alam. The Chief Executive Officer (CEO) needs a discount rate for the evaluation purposes as well as the project that will result in initial after tax cash savings of RM3 million at the end of the first year. These saving will grow at the rate of 3 percent per year. It is recommended that Coffee Valley should take on this project if overall cost is less than RM30 million. The company has 1.8 million shares of stock outstanding with market price of RM20 per share. The beta of the stock is 0.76 and market risk premium is 9 percent. The risk-free rate is 10 percent. The companys debt is publicly traded and was recently quoted at 94 percent of the value. It has a total face value of RM6 million and it is currently priced to yield 11 percent. Assume the corporate tax rate is 34 percent. Compute the cost of equity for Muafa Coffee Valley Sdn Bhd.