Descriptions: Please take note that this assessment is worth 40% of the total assessment for this semester. This assessment has 6 questions and each question carries 10 marks. The total mark obtained will be converted to 40% for final grading. Instructions: Attempt ALL questions. Arrange your answers according to ascending numbering order. State the word count at the end of your answer for each question that has word limit requirement. Question 1 (10 marks) The M&M Theorem proposed by Modigliani and Miller formed the basis of capital structure theory. Describe Proposition 1 (with taxes) and Proposition II (with taxes). Discuss briefly the application of these two propositions in the real world. (maximum 200 words) Question 2 (10 marks) AAA, an equipment costing $150,000 has a useful life of eight years, after which time its estimated resale value will be $25,000. Annual costs will be $5,000 for the first three years and then $8,000 for each of the next five years. Another equipment, BBB costing $100,000 with a useful life of 6 years. It has no resale value. Annual costs will be $7,000 for each of the year. Using a discount rate of 10%, compute the annual equivalent cost for each equipment. Which equipment will be your choice and why? Question 3 (10 marks) Cranberry Medical Ltd. paid a dividend of $5.00 per share on its ordinary shares yesterday. Dividends are expected to grow at a constant rate of 10% for the next two years, at which point the dividends will begin to grow at a constant rate indefinitely. If the share is selling for $50 today and the required return is 15%, what is the current dividend yield? What is the growth rate of the expected annual dividend after year two