QUESTION 7 If George Coffin does not spend any of the initial $5 million cash payment for five years, what would the future value of a balanced stock and mutual funds portfolio be if he were able to earn 8% per year.

QUESTION 8 If he invested the money at 8%, he would have to pay 21% in federal income taxes plus 10% in state income taxes on his earnings. Would he be better off investing in Minnesota tax-free bonds earning 4% than investing in taxable securities earning 8 percent? Explain why.

QUESTION 9 If George Coffin were risk averse, which investment portfolio would be safer the Minnesota bonds that are rated AA and AAA or the balanced stock and mutual fund portfolio with a Beta of 1? Explain your answer.

QUESTION 10 In your opinion, is George Coffin getting a good deal for his company? Explain your answer.

QUESTION 11 Based on the package negotiated by George Coffin with the ESOP, are the employees getting a good deal? Explain your answer. When you prepare your annual financial reports, you will determine a figure for earnings per share for the years from 2022 to 2027. Each employee will receive an annual payment of 50% of the earnings per share. Remember each employee owns one share of stock.

QUESTION 12 What would an employee earn from the companys earnings per share each year? The remainder (50%) of the earnings per share will be deposited into a sinking fund at 8 percent interest to offset the cost of the $5 million payment to George Coffin in 2028.

QUESTION 13 Will the fund have enough money to make the $5 million payment to George Coffin? If not, how much will the ESOP have to borrow to make the payment?

QUESTION 14 Based on all the information you have, write a summary paragraph that assesses the whole package from the perspective of the company. How would you rate the financial health of the company at the end of 2027 if sales projections are accurate? Talk about the risk and possible financial impact on the company if the coronavirus forced the company to shut down for two months in 2022. How likely is it that the company would shut down if the demand for burial vaults increases as the death toll increases? What other risks might the company face? Explain why you feel the way you do about the company.