1. There is a company in the world of Franco Modigliani and Merton Miller. The current market value of the total asset is $5000, and the value is expected to either double or halve by next year. The company has one zero-coupon bond with face value of $3000 due next year. The risk-free rate is 10%. Using one-period binomial approach, what is the value of debt and equity? The value of the firm? V= 2. In the world of Modigliani and Miller, firm value does not depend on the capital structure. However, two important assumptions must hold in order to make the above statement true, which are: 1) Total future cash flows to equity and debt holders are unaffected by capital structure, and 2) no arbitrage opportunities exist in the economy. Why are these two assumptions necessary for M&M Proposition 1 to hold true? (answer as concise as possible)