FNU Corporate Finance & Critical Thinking Interest Rates & Future Value Discussion
1-Suppose you deposit a large sum in an account that has a low-interest rate & simultaneously deposit a small amount in an account that has a high-interest rate. Which account will have the largest future value? Provide an example. Use your own words.
2-If you were an athlete negotiating a contract, would you want a big signing bonus payable immediately and smaller payments in the future, or vice versa? How about looking at it from the team’s perspective?
Fully explain using your own words.
3-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.
Explain fully using your own words.