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You are the financial planner for Johnson Controls. Assume last year s profits were $ 7 5 0 , 0 0 0 . The board
You are the financial planner for Johnson Controls. Assume last years profits were $ The board of directors decided to forgo dividends to stockholders and retire highinterest outstanding bonds that were issued years ago at a face value of $ 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 years. Bank A pays compounded quarterly, and Bank B pays compounded annually. Use Table and Table provided.
Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount.
a Which bank would you recommend?
multiple choice
Bank A
Bank B
a How much of the companys profit should be placed in the bank?
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 years?
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