The company?s bank has advised that the interest rate on any new debt finance provided for the projects would be 9.5% p.a. The company?s preference shares currently sell for $7.50, and to induce investors to take up a new offering of preference shares the company would have to set the issue price at a discount

of 4% off the present market price.

The company?s existing ordinary shares sell for $2.50 each and management has disclosed that it expects to pay a dividend of 21 cents per share at the end of the next year. Historically, dividends have increased at an annual rate of 7% p.a. and are expected to continue to do so in the future.