I need an explanation for this Business question to help me study.
1.As you increase the length of time involved, what happens to future values? What happens to present values?
2.Why would General Motors Corp. be willing to accept such a small amount today ($25,000) in exchange for a promise to repay four times that amount ($100,000) in 30 years? What is this a reflection of?
3.Suppose a project has conventional cash flows and a positive NPV. What do you know about its payback period? Its discounted payback period? Its profitability index? Its IRR? Explain.
4.How does a bond issuer decide on the appropriate coupon rate to set on its bonds? Explain the difference between the coupon rate and the required return on a bond.