Please answer all of these questions in no more than one-two paragraph(s) or you may use an outline form:

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.