QUESTION $1(25$ MARKS$)$

$($a$)$ Ice Berhad is a fozen food company that intends to diversify into electronics.

The project has a return of $12\%$ and Ice Bhd is trying to decide whether it should

be accepted. Following information on $3$ electronic companies are provided to

assist in finding the proxy beta using CAPM for the projects,

Assume that all debt is risk$-$free, and that corporation tax is $30\%$ precent, Ice Bhd is

financed by $30\%$ debt and $70\%$ equity. The risk$-$free rate of return is $5\%$ and the return

on the market is $9\%.$ Advice whether the project should be accepted.

$($b$)$ "Managers should not focus on the current stock value because doing so will

lead to an overemphasis on short$-$term profits at the expense of long$-$term

profits." Comment.

Corporate finance question..