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 5 years ago at a face value of $1,420,000. 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 10 years. Bank A pays 6% compounded quarterly, and Bank B pays 7% compounded annually. (Use Table 1 and Table 2provided.) (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) a-1. Which bank would you recommend?

multiple choice

• Bank A

• Bank B

a-2. How much of the companys profit should be placed in the bank?

Profit =

b. If you recommended that the remaining money not be distributed to stockholders but be placed in Bank B, how much would the remaining money be worth in 10 years?

Future Value =