question archive BCO126 MATHEMATICS OF FINANCE Midterm Task brief & rubrics Task General instructions: 1
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BCO126 MATHEMATICS OF FINANCE Midterm Task brief & rubrics
Task
General instructions:
1. Save this Word document in your computer and name your file: MIDTERM_xxxxxxx.docx (where xxxxxxx is your last name)
2. In this document write your explained answers on the lines.
3. Use a blank sheet of paper to hand-write your formulas and your workings to obtain the result for each question.
4. Include each question number and highlight each final result.
5. Take a picture of each page and attach them to this Word document.
6. Upload this word file to the Moodle link called “Midterm Submission point”.
Details of the task:
· This assignment must be performed individually
· Structure: 4 questions (25% weighting each)
· All questions must include workings and a reasoned answer, not just the final number.
Task content:
Read the following context;
Considering that the banks are currently offering an average annual rate of 5%, calculate each of the following investment options and explain which is more attractive in order to be able to obtain the $150,000 that we need for our new store, based on those calculations. Please show your workings for each option.
b) Investing all our savings in a product that offers annual 5% simple interest for 10 years.
We also have been offered two alternative projects:
a) Which one has the shortest payback period comparing these projects?
b) Considering a cost of capital of 4%, what’s the NPV of the best option?
c) Which one would be the most preferable option?
· The formulas and procedures to obtain the result must be included.
Submission: Week 4 – Via Moodle (Turnitin)
Weight: This task is a 30% of your total grade for this subject.
It assesses the following learning outcomes:
· to understand the concept of time value of money
· to distinguish between simple and compound interest rates
· to understand the concept of rate of return of a project in finance
· to understand the concept of net present value and payback period
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