Question 1A (3 marks) EXCEL, an equipment costing $100,000 has a useful life of 6 years. It has a resale value of $8,000. Annual costs will be $7,000 for each of the year. Another equipment, APLUS costing $120,000 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 $8,000 for each of the next five years. Compute the annual equivalent cost for each equipment using a discount rate of 10%. Which equipment will be your choice and why? Question 1B (1+1+1=3 marks) Amazing Ltd. is a popular caf chain in Sydney. The management is considering the following two mutually exclusive projects available: Year 0 1 2 3 4 5 Project Mocha (S) -50,000 24,000 24,000 17,000 11,000 20,000 Project Latte ($) -65,000 22,000 21,000 30,000 37,000 24,000 (1) What is the crossover rate.? Round your answer to two decimal points. (ii) What is the NPV for these two projects at crossover rate? (iii)Which project is better if the required return is above crossover rate? Why? Question 2 (6 marks) Describe Proposition I (with taxes) and Proposition II (with taxes) of M&M Theorem by Modigliani and Miller which formed the basis of contemporary capital structure theory. Discuss briefly how these two propositions are applied in the real world