$2.30 per share. Management believes that dividends and earnings should grow at 8% annually. Since new stock would need to be sold to finance an expansion, Builtrite expects flotation costs to be 5% of the expected selling price of $48 a share. Based onthis, and a marginal tax rate of 34%, what is the after-tax cost of new common stock?5)Common stock is called a hybrid security because it takes on the attributes of both preferred stock and bonds.6)QUESTIONS 1 – 3 GO WITH THE FOLLOWING PROBLEM:

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Builtrite has estimated their cost of capital is 14% and they are considering the purchase of a machine with the following capital budget:Initial Investment $62,000RATFCF Year 1$22,000RATFCF Year 2$30,000RATFCF Year 3 $38,000What is the machine’s NPV? 7)What is the Profitability Index (PI) of this machine?8)What is the Internal Rate of Return of this machine?9)QUESTIONS 4 – 5 GO WITH THE FOLLOWING INFORMATION:Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to$0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The machine would increase EBDT by $42,000 annually.Builtrite’s marginal tax rate is 34%.What the RATFCF’s associated with the purchase of this machine?10)What is the TCF associated with the purchase of this machine?