The Crystal Glass Company is proposing the construction of a new plant in east Brisbane. The plant has an annual capacity of 100,000 tons and will cost $100 million to build. Profits on the plant will be taxed at a rate of 50 per cent. The company expects its new plant to produce 90,000 tons of plate-glass per year. The annual revenues of $59.4 million based on an anticipated selling price of $660 per ton will allow the company to gain 12 per cent market share in the first year of operation. Fixed costs are expected to average $12 million annually while variable costs are estimated to be around $140 per ton. The plant will be fully depreciated on a straight-line basis over ten years, with an estimated salvage value of $2 million at the end of the project. The required rate of return on the project is taken as 15 per cent due to the high degree of systematic risk associated with a cyclical product like plate-glass. Calculate the NPV of the project and ascertain if the company should go ahead with the proposed project. Question 2 (25 marks) NT Mining's bonds will mature in four years with a total face value of $30 million, paying a half yearly coupon rate of 10% per annum. The yield on the bonds is 16% per annum. The market value for the company's preference share is $6.5 per unit while the ordinary share is currently worth $2.0 per unit. The preference share pays a dividend of $1.0 per share. The beta coefficient for the ordinary share is 1.8 and retained earnings are expected to be more than sufficient to fund the ordinary equity component of any new investment. The market risk premium is estimated to be 11% per annum and the risk-free rate is 5% per annum. The company is subject to a 30% corporate tax rate. Below is the balance sheet for NT Mining: $ (Million) Debt: Bonds $30 Equity: preference shares (100,000 units) $3 Ordinary shares (10 million units) $15 a. Calculate the after-tax cost of each of the company's current financing sources as below: • Bonds • Preference shares • Ordinary shares b. Using the information provided, calculate the market values for the financing sources listed below: • Bonds • Preference shares • Ordinary shares c. Using the information from the previous sections, calculate NT Mining's after-tax weighted average cost of capital (WACC). The finance manager has identified a potential project with an IRR of 20% per year. Should this project be undertaken by the company? Discuss your recommendation and support with relevant calculations. Question 3 (15 marks) XYZ Ltd is considering short term financing for its working capital requirement. You are invited to provide a discussion on the three key factors that the company should consider in selecting different sources of short term financing. Briefly discuss these factors and illustrate with an appropriate example where possible.