a) Define Modigliani and Millers dividend irreverence theory. What are the limitations of this. theory? (8marks) b) A project has an initial cost of investment of ksh 2,500,000. It is expected to produce the following cash inflows. Years "000 1 3000 2 4500 3 9000 4 11500 No Scrap value is expected. The cost of capital is expected to be 12% over 4 year's period. Should the project be accepted? (4marks) c) Muchemi wishes to determine the number of years it will take her to initiate Ksh. 10,000 deposit earning 14% annual interest to grow to equal amount of Ksh. 25,000. How many years will she take to earn Ksh. 25,000? (4marks) d) Johnson Company has the following dividend per shares and market price for share for the period of 2000-2006 Year Average Market price Dividend 2000 31.25 1.53 2001 20.75 1.53 1 2002 30.88 1.53 2003 67.00 2.00 2004 100 2.00 2005 154 3.00 2006 160 3.00 Compute the annual rate of return of Johnson shares for 6 years. How risky are the shares (8marks)