You have been appointed as the investment manager at the Head Slide Bhd, a public listed company on Bursa Malaysia security market. The company was listed five years ago. Now, the board of directors planning for next wave of growth. You have to make an important finance decision before move on to investment decision. The company is preparing following activities for additional fund requirement.

The company has 2 million shares outstanding.

Market value of debt is RM4 million

FCFF is currently RM1.5 million

Equity beta is 0.90, the equity risk premium is 6% and the risk-free rate is 4%.

The before-tax cost of debt is 6%.

The tax rate is 30%.

Head Slide Bhd is financed with 25% of debt.

FCFF growth rate is 4%.

3) Derive the total market value of equity and critically discuss your answer. (10 Marks)

Note: Kindly Answer worth 10 marks or do not answer. Thank You