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You are the financial planner for Johnson Controls. Assume last years profits were $760,000. The board of directors decided to forgo dividends to stockholders and
You are the financial planner for Johnson Controls. Assume last years profits were $760,000. The board of directors decided to forgo dividends to stockholders and retire high-interest outstanding bonds that were issued 4 years ago at a face value of $1,380,000. You have been asked to invest the profits in a bank. The board must know how much money you will need from the profits earned to retire the bonds in 8 years. Bank A pays 8% compounded quarterly, and Bank B pays 9% compounded annually. (Use Table 1 and Table 2 provided.)
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