BCO 126 MATHEMATICS OF FINANCE Task brief & rubrics. RESIT EXAM Task

BCO 126 MATHEMATICS OF FINANCE Task brief & rubrics. RESIT EXAM

Task

This task is individual

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I invested on January 1st 2015 10.000€ in a financial product that is giving a compounded interest with payments on a quaerterly basis.

On January 1st 2023 I will get back my investment together with the interests, and I know that I will receive 42,871.8€.

It was a good investment, but I can´t remember the rate.

Could you tell me?

A company has the following cash flow:

Period C0= -1000

Period C1= +500

Period C2= -100

Period C3= +600

Should the company invest in the project if cost of capital is 5%?

.

3.- You own a computer that will generate 2.000.000 bitcoins return over the coming year. The cost of producing the bitcoins is very small, as the energy consumed is generated with solar panels. The computer is anyhow a bit slower every year, and the volume of bitcoins produced is expected to decline at 3% per year. The discount rate is 15%. What is the PV of the computer and the bitcoin cashflows it produces?

4.- The expected dividend per share of a company is 2000 euros, per year and forever. Assuming a growth rate of 2% and an interest rate of 9%, which is the present value of the share?

5- Your company has the opportunity to invest in a project that will generate cash-flows of 13,000€ per year, starting in 6 years, and for 10 years.

Calculate how much you should invest today if you want to get a profitability of 11%

Formailities

Font: Arial 12,5 pts.

Text alignment: Justified.

The in-text References and the Bibliography have to be in Harvard’s citation style.

NO SOFTWARE SOLVING TOOLS ALLOWED

It assesses the following learning outcomes:

understand the concept of time value of money;

define the concept of rate of return of a project in finance

distinguish between simple and compound interest rates;

assess the present value of future cash flows and the future value of regular savings, annually and periodically;

demonstrate an ability to apply the technical skills related to the course in a practical context;

assess the future revenue generation of a regular savings scheme and the amount needed to be saved over time to meet a future series of payments;

determine percentage calculations and discounting.

Enable students to calculate and manipulate future value factors and annuity factors for annual and other periods calculating future value, savings outcomes and future revenue

Rubrics

Descriptor

9-10

The student demonstrates an excellent understanding of the concepts.

8-8.9

The student demonstrates a good understanding of the concepts.

7-7.9

The student demonstrates a fair understanding of the concepts.

6-6.9

The student demonstrates some, but insufficient understanding of the concepts.

3-5.9

The student demonstrates insufficient understanding of the concepts. They may mention some relevant ideas or concepts, although it is clear that the relationship between them is not understood by the student.

1-2.9

The student demonstrates insufficient understanding of the concepts and does not mention any relevant ideas or concepts.

0

The student leaves the question blank or cheats.