Your investment portfolio consists of RM$15,000$ invested in only one stock, Roof Berhad. The risk$-$free interest is $5\%.$ The expected return is $12\%$ and standard deviation of $40\%$ for Roof Berhad. The market portfolio has an expected return of $10\%$ and a standard deviation of $18\%.$ The CAPM conditions are all verified.SunTech Bhd is a company that owns several technology stores in Malaysia. They

are considering opening a new store in Penang taking advantage of the proximity

to a university campus. This project is financed with a zero$-$coupon bond with

market value today of RM$291\mathrm{.}26$ million. The bond matures in one year. The

project will generate a cash flow in two years of either RM$300$ million with

probability of $60\%$ or RM$280$ million with probability of $0\mathrm{.}4\%.$ The yield to maturity

of the bond is $3\%$ annually. Assume investors are risk neutral.

Calculate;

$($i$)$ The face value of debt.

$($ii$)$ Annual return demanded by investors

Explain;

$($iii$)$ The difference between yield to maturity and cost of debt $($Rd$)$

$($iv$)$ Advantages of financing this project with equity instead of debt

$($i$)$

Graph the position of Roof Berhad and market portfolio in Capital Market Line $($CML$).$

$(4$ marks$)$

$($ii$)$

Calculate the systematic risk and idiosyncratic risk of Roof Berhad.