You are the financial planner for Johnson Controls. Assume last year's profits were $$720,000.$ The board of directors decided to

forgo dividends to stockholders and retire high$-$interest outstanding bonds that were issued $6$ years ago at a face value of

$$1,340,000.$ 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 $2$ provided.$)$

Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount.

a$-1.$ Which bank would you recommend?

Bank A

Bank B

a$-2.$ How much of the company's 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

Present value interest factor of $$1$ per period at i$\%$ for n periods, PVIF$($i$,$n$).$

Period $0\mathrm{.}5\%1\mathrm{.}0\%1\mathrm{.}5\%2\mathrm{.}0\%2\mathrm{.}5\%3\mathrm{.}0\%3\mathrm{.}5\%4\mathrm{.}0\%4\mathrm{.}5\%5\mathrm{.}0\%5\mathrm{.}5\%6\mathrm{.}0\%6\mathrm{.}5\%7\mathrm{.}0\%7\mathrm{.}5\%8\mathrm{.}0\%8\mathrm{.}5\%9\mathrm{.}0\%9\mathrm{.}5\%10\mathrm{.}0\%10\mathrm{.}99500\mathrm{.}99010\mathrm{.}98520\mathrm{.}98040\mathrm{.}97560\mathrm{.}97090\mathrm{.}96620\mathrm{.}96150\mathrm{.}95690\mathrm{.}95240\mathrm{.}94790\mathrm{.}94340\mathrm{.}93900\mathrm{.}93460\mathrm{.}93020\mathrm{.}92590\mathrm{.}92170\mathrm{.}91740\mathrm{.}91320\mathrm{.}909120\mathrm{.}99010\mathrm{.}98030\mathrm{.}97070\mathrm{.}96120\mathrm{.}95180\mathrm{.}94260\mathrm{.}93350\mathrm{.}92460\mathrm{.}91570\mathrm{.}90700\mathrm{.}89850\mathrm{.}89000\mathrm{.}88170\mathrm{.}87340\mathrm{.}86530\mathrm{.}85730\mathrm{.}84950\mathrm{.}84170\mathrm{.}83400\mathrm{.}826430\mathrm{.}98510\mathrm{.}97060\mathrm{.}95630\mathrm{.}94230\mathrm{.}92860\mathrm{.}91510\mathrm{.}90190\mathrm{.}88900\mathrm{.}87630\mathrm{.}85380\mathrm{.}85160\mathrm{.}83960\mathrm{.}82780\mathrm{.}81630\mathrm{.}80500\mathrm{.}79380\mathrm{.}78290\mathrm{.}77220\mathrm{.}76170\mathrm{.}751340\mathrm{.}98020\mathrm{.}96100\mathrm{.}94220\mathrm{.}92380\mathrm{.}90600\mathrm{.}88850\mathrm{.}87140\mathrm{.}85480\mathrm{.}83860\mathrm{.}82270\mathrm{.}80720\mathrm{.}79210\mathrm{.}77730\mathrm{.}76290\mathrm{.}74880\mathrm{.}73500\mathrm{.}72160\mathrm{.}70840\mathrm{.}69560\mathrm{.}683050\mathrm{.}97540\mathrm{.}95150\mathrm{.}92830\mathrm{.}90570\mathrm{.}88390\mathrm{.}86260\mathrm{.}84200\mathrm{.}82190\mathrm{.}80250\mathrm{.}78350\mathrm{.}76510\mathrm{.}74730\mathrm{.}72990\mathrm{.}71300\mathrm{.}69660\mathrm{.}68060\mathrm{.}66500\mathrm{.}64990\mathrm{.}63520\mathrm{.}620960\mathrm{.}97050\mathrm{.}94200\mathrm{.}91450\mathrm{.}88800\mathrm{.}86230\mathrm{.}83750\mathrm{.}81350\mathrm{.}79030\mathrm{.}76790\mathrm{.}741620\mathrm{.}72520\mathrm{.}70500\mathrm{.}68530\mathrm{.}66630\mathrm{.}64800\mathrm{.}63020\mathrm{.}61290\mathrm{.}59630\mathrm{.}58010\mathrm{.}564570\mathrm{.}96570\mathrm{.}93270\mathrm{.}90100\mathrm{.}87060\mathrm{.}84130\mathrm{.}81310\mathrm{.}78600\mathrm{.}75990\mathrm{.}73480\mathrm{.}71070\mathrm{.}68740\mathrm{.}66510\mathrm{.}64350\mathrm{.}62270\mathrm{.}60280\mathrm{.}58350\mathrm{.}56490\mathrm{.}54700\mathrm{.}52980\mathrm{.}513280\mathrm{.}96090\mathrm{.}92350\mathrm{.}88770\mathrm{.}85350\mathrm{.}82070\mathrm{.}78940\mathrm{.}75940\mathrm{.}73070\mathrm{.}70320\mathrm{.}67680\mathrm{.}65160\mathrm{.}62740\mathrm{.}60420\mathrm{.}58200\mathrm{.}56070\mathrm{.}54030\mathrm{.}52070\mathrm{.}50190\mathrm{.}48380\mathrm{.}466590\mathrm{.}95610\mathrm{.}91430\mathrm{.}87460\mathrm{.}83680\mathrm{.}80070\mathrm{.}76640\mathrm{.}73370\mathrm{.}70260\mathrm{.}67290\mathrm{.}64460\mathrm{.}61760\mathrm{.}59190\mathrm{.}56740\mathrm{.}54390\mathrm{.}52160\mathrm{.}50020\mathrm{.}47990\mathrm{.}46040\mathrm{.}44180\mathrm{.}4241$

Future value interest factor of $$1$ per period at i$\%$ for n periods, FVIF $($i$,$n$).$

Period