Part $1.$ Integrity Materials is considering expanding on some land that it currently owns. The initial cost of the land was $$364,500$ and it is currently valued at $$357,900.$ The company has some unused equipment that it currently owns valued at $$29,000$ that could be used for this project if $$8,200$ is spent for equipment modifications. Other equipment costing $$164,500$ will also be required. What is the amount of the initial cash flow for this expansion project?

Part $2.$ Assume a firm utilizes the security market line approach to determine the cost of equity. If the firm currently pays an annual dividend of $$2\mathrm{.}40$ per share and has a beta of $1\mathrm{.}42,$ all else constant, which of the following actions will increase the firm's cost of equity?

A$.$ A decrease in the firm's beta

B$,$ an icrease in the market rate of return, but no change in the market premium

C$,$ a drease in the dividend amount

D$.$ An increase in the risk free rate

E$.$ an increase in the divident amount