1. Formalities: • You should submit a document in Excel format.
Formalities:• You should submit a document in Excel format.• Font: Arial 11 pts.• Text
alignment: Justified.Submission: Sunday February 13th.Weight: This task is a 30% of your
total grade for this subject.This task assesses the following learning outcomes:• Understand
the basic theories of finance and apply these to practical problems.• Understand the goal of
the Firm• Understand the different forms of organizations• Analyze series of future cash
flows and recommend choices for investment. Net Present value, annuities, perpetuities,
loan amortization schedules. ASSIGNMENT QUESTIONS:IMPORTANT: SHOW YOUR
DETAILED SOLUTIONS FOR EACH QUESTION.Problems (60 points)1. You are thinking
about investing your money, and you wonder how much time would you need to quadruple
it?You don´t know how much money you have, but you know that the interest rate is 9%
compounded annually.2. Delivery ASAP Co. has identified an investment project with the
following cash flows. If the discount rate is 10 percent, what is the present value of these
cash flows?Year 0= -1200Year 1=+500Year 2= +600Year 3= +750Year 4=+4003. An
investment offers 6,900 per year for 18 years, with the first payment occurring one
yearfrom now. If the required return is 6 percent, what is the value of the investment?What
would be the value if the first payment take place on day 1?4. Given an interest rate of 6.1
percent per year, what is the value at Period t = 10 of a perpetual stream of 1,500 annual
payments that begins at Period t = 21?5. Your bank offers to lend you €60,000 at a 7%
annual interest rate to start your new business. The terms require you to amortize the loan
with 3 equal end-of-year payments. a) Find an amount of annual payment. b) Show the
amortization schedule. Questions (40 points)a) What happens to the future value of an
annuity if you increase the rate r? What happens to the present value?b) Who owns a
Corporation? Describe the process whereby the owners control the firm’s management.
What is the main reason that an agency relationship exists in the corporate form of
organization? In this context, what kinds of problems can arise?c) Why is the goal of
financial management to maximize the current share price of the company’s stock? In other
words, why isn’t the goal to maximize the future share price?d) When we talk about the
discount rates in a project, what does the discount rate mean? Explain with your own words
what is the difference between “hurdle rate” and “opportunity cost of capital”.e)
Considering that you have a consol of 1€ with an annual interest rate of 10%, at which price
could you sell it today? Would you be able to explain what is the future value of that
console?RubricsDescriptor9-10The student demonstrates an excellent understanding of the
concepts.8-8.9The student demonstrates a good understanding of the concepts.7-7.9The

2. student demonstrates a fair understanding of the concepts.6-6.9The student demonstrates
some, but insufficient understanding of the concepts.3-5.9The 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. 1-2.9The student demonstrates insufficient understanding of the concepts and
does not mention any relevant ideas or concepts.0The student leaves the question blank or
cheats.