You are the financial planner for Johnson Controls. Assume last years profits were $740,000. 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 $1,360,000. 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.) (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

*PLEASE USE TABLES TO SOLVE* thank you

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:

Transcribed image text: Present value interest factor of $1 per period at i% for n periods, PVIF (1.n). Period 0.5% 10% 15% 209 25% 30% 35% 40% 45% 1 0.9950 5,5% 5.09 0 9001 09852 09804 654 50% 0.9756 0.9709 09662 70% 0.90 15 75% 0.95000 9524 a0% DOW 2 95% 0.9901 0 94700.94349390 09046 09003 10 UN 0.9707 0.9612 0.9518 0.9426 0.0302 0.9335 0.9246 09157 a 00200 0.9217 08985 09851 09070 0917400132 0.0001 0.9563 09423 0.92060,9151 0.0019 0.8890 0.8900 0.9700 0.0817 0.8734 0.8553 4 0.8573 0.84950.8417 0.8040 01264 0.8763 0.0839 0.9802 0.95100.9422 0.9238 0.9060 0.3885 08516 08306 0.827 08163 01050 0.8714 0.8548 5 0.8386 079330.7829 07722 07617 0.751) 0.9754 0.9515 08227 0 8072 0.9283 0.9057 0.8830 0.3626 0.8420 0.8219 0.7921 0.777367629 07488 67350072180.7004 0.5956 0630 G 0.9705 09420 0.0025 07835 0.7651 0.0000 0.8623 0.9145 0.7473 0.721 07120050660680 0.61600.6499 06352 08375 0.8135 07003 0.7679 0.7462 0.9657 0.7252 05209 0.7050 0.5853056630548006302 0.6129 0.53 0510 05645 7 09327 09010087060,8413 | 0813107850 0.7599 07348 0.9809 8 0.7107 0.9235 0.8877 0.8535 0.6874 0.6651 06436 0.6227 0.002 0.5835 0 564905470 052 05132 0.8207 0.7894 0.7594 0.7307 9 0.9561 09149 0.7032 0.6768 0.6518 0.6274 06042 08745 0.83600 8007 0.502005607 0.5403052070501004800 04545 0.7664 0.7337 0.7026 0.6729 10 0.9513 0.905308617082030.781207441 0.7099 0.6756 0.5446 0.6176 0.5919 0.5674 05439 0.521605002 0.5439 0:4799 0.4604 0.4418 04241 11 0.9450 0.5854 0.8489 06139 0.8049 0.7621 0.5504 0.5327 08963 040521 0.432 07224 05000 04423 04224 0.4035 OM55 06849 0.6496 0.6162 0 5847 05549 0.9419 0.0874 08364 0.7885 0.7436 0.7014 0.5288 05002 04751 12 0.4513 0.4289 0.407003875 0385 0.3505 0.6618 0.6245 0.5097 0.5568 0.5200 13 0.4970 0 4697 04440 0.4190 1971 0.9372 0.8787 0.8240 0.7730 0.7254 06010 03757 0.3555 0.3365 0310 0.5394 0.6006 14 0.5643 05303 0.49000 4600 0.4410 0.4150 0.30 0.3877 0.3453 0.3262 0307302997 0.9325 0.6700 0.8110 07579 0.7077 0.6611 05178 0.5775 0.54000 5051 04720 04423 0.4141 15 0.9279 0.8513 0.799907430 06905 6.3878 0.363303405 0.3194 0 299202807 0.2033 0.6419 0.599 0.5553 0.5167 0.4810 0.4470 04173 0.9239 0.3880 16 0.2624 03380 0.3152 0 2041 27450253 02314 0.0520 0.7800 0.720406736 0.6232 0.5767 0.533904945 0.4501 17 0.3387 3144 0.291 | 0271102519 0234102176 0.4245 0.3936 0.3055 0.9107 08444 0.7764 0.7142 0.6572 0.6050 0.5572 05134 0.4732 04303 0.4024 0.3714 0.3428 03106 0.29250270302409 10 09141 0.0360 02311 021300 1970 0.7649 0.7002 0.6412 0.5874 05364 04936 04520 10 04155 0.381503503 0.321902959 0.27200 250202303 02170 0.1962 1790 0.0096 0.6277 0.7536 0.68640.6255 0.5703 0.5202 0.4740 04333 03957 0.00161 3305 0.3022 0.2765 025310.2017 0:2122 0.1945 0.1703 20 0.9051 0.819507425 0.67300610305637 0.5029 0.4564 0.1035 0.4146 37000 3427 0311002830 0.2584 0.2354 02145 0.1056 0.1764 0.1620 0.1405 21 0.0006 0.0114 0.7315 0 6500 0.5054 0.5375 04856 0.40 0.5908358003249 0.2942 0.2005 02415 02180 0 1987 01009 0.16 0.17 0.1351 22 0.0961 0.0034 0.7207 0.64680 5800 05210 0.4092 0.422001797 03418 09070 0.2775 02502 02257 02037 01039 10.10020.1500 0.130 1220 23 O 1910 0.7954 0.7100 0.0342 0.5667 0 3067 0.4533 0.4067 0.3634 0.32600 2010 0.2010 0.2340 0 21001005 0.1117 0.1703 0.153113700 1240 24 0.0072 0.7076 0 6095 0.6217 0.5529 0.49100/300 0.3001 0347703101 0.2767 0 2470 02200 0.1971 0.1763 0.1577 0.1412 0.1264 0113301015 25 08820 0.779 0.0002 0.6005 0.5094 0.4776 0.4231 0.3751 0.33270205362022 02330 0.2071 0.104201640 0.16000 1301 01100 0109400923 26 0878407720 0.6790 0.597605262 0.4637 0.4000 0.1007 0.31840 2012 2400 02190 0.1945 01722 0.15250.1352 01100 0.1064 00045 006) 27 0.874007644 0.6000 05050 05134 04502 0.396034000304702678 02356 02074 010200.1000 0.1410 0.125201105 0.0970000600079 20 0.0007 075600.6501 0.5744 06000 04371 0,3017033350201602551022300 1956 01715 0.15040 13200 11500 1010 00050 DOS 20 1053 7400 0.640405431 0.4687 04245 0.360703207 0 27000 2420 02117 01040 0.1610 0.1406 0.12.20 0.107300030002200710 00030 30 0.85100 7410 0.6300 0.5521 0.4767041200.3583 03083 0.2670 023140.2005 0 1741 0.15121314 0.11421 0.09940.0805 0.0754 0.0667 0573 31 08567 0.7346 0.6303 0.5412 0.4651 0.4000 0.3442 0.2905 0.2555 0.2204 0.1002 1643 0.1420 1220 0.1063 00920 | 0.0797 00101 0.0000 00621 12 0852507273 0.6210 0.53060453803883 03326 0.2851 0244502099 0.1003 1550 0.1333 0.1147 0 0908 0.00520.0735 0.0034 0054000474 33 0.840207201 0.6110 0.5202 | 04427 0.3770 03213 02741 02340 0.1999 0.1709 01462 0.1252 0.1072 0.0919007000677 0002 00500 00431 34 0.0440 0.7130 0.6020 0.5100 0431003660 0.3105 0.2636 0220 0.1904 0.1620 0.1370 0.1175 0.1002 0.08550073000024 0.0534 0.0457 0.0391 35 0.0300 07050 059390 5000 0 4214 0 3554 0.3000 0.25340210 0.1013 0.1535 01301 0.1103 00237 0.07 0.067600575 0.041000417 0.0066 35 08350 0.000 0.5651 0 4002 04111 03450 028930 2437 0.2050 0.1727 0.1455 01227 0.1030 0.0075 0.0740 0.0026 0.05300044000301 0.0323 0.0315 0.6920 05764 0.48060.4011 0.3350 0.2800 02343 0.1902 0.1644 0.1379 0.1158 0.0973 0.0818 0 058800580004000041200348 00204 30 0.8274 0.6852 0.5679 0.4712 0.3913 0.3252 0.2700 0.2253 0.1870 0.1560 0.1307 0.1092 0.0014 0.0705 0064000537 00050 00370 031 0.0207 39 03158 08232 0.6784 0.5595 0.4619 03817 0.2014 0.2166 00415 0.1797 0.5491 0.1239 01031/05 0.0715 00598 00487 00347 0020000243 40 0.8101 0.6717 05613 04529 03724 0.3066 0.2526 0.2083 0.1719 0.1420 0 1175 0.007200005 0.0668 0.0554 00460 0.0393 0.0518 0.025 0.0221 41 08151 0.6650 0.2440 0.5631 04440 0.3833 0.2976 0.1645 0.0353 0.2003 0.1353 0.1113 0 0292 0.0242 0.0201 0.0917 0.0756 00624 0.0516 0.0426 42 08110 0.6584 0.5351 0.4353 3545 0.2000 0.2350 00103 0.1200 0.1026 0.1674 6.1055 0.080500710 0.0500 00480 0.0395 00325 0.025 0.0221 08070 0024600202 06519 05272 0.4200 03458 02805 02278 0.1852 0.1507 0.1227 0.100000016 0.0667 0.0545 0.014600600300 00100 0.0154 6 0151 0.8030 44 0.6454 0.5194 04184 0.3374 0.2724 0.2201 0.1780 0.0040 0.1442 0.1109 005000041500338 0.0276 0.02.20 00770 0.0520 45 0.799006391 0.51170410203292 02544 1712 0.1300 0.1113 0009900727005080047600385 00313 0.025 0.0207 0.0166 00137 46 0.7950 06327 0.5042 0.4022 0.3211 0.2567 02055 0.0035 00190 0.0154 00125 0.1646 0.13200 1000 0.0052006050056200445 0035 0.0290 00549 00113 47 0.7910 0.6265 0.4967 03943 03133 0.2493 0.1905 0.1583 0.1250 0.1000 00607 0.00470 05 18 0.0416 0.0334 0.0200 0.0016 0.0174 0.010) 48 0.7871 0.8203 0.4894 0.0319 0.0011 00240 0.01000010000130 03865 0.3057 0.2420 0.1918 0.1522 0.1200 00901 0.0765 0.0810 0.0407 49 07832 00147 00117 00004 0.6141 0.4021 0 3700 0.2902 0.2350 0.1063 0.1463 0.1157 0.0016 0.0725 0.0575 0.0457 0.0393 0.020900230 00184 00339 0021000013 00169 00134 0010700015 50 07793 0.0080 04750 0 3715 0 2909 0.22010 1791 014070 1107 0.0872 0.0108 0.054300479 455 10500 35 10950 1000 12100 1110 12250 12 10000 11881 12950 14116 15306 13120 149TI 13401 1671 1723 1878 2.000 1.1772 12723 135 15037 16315 17701 12206 2009 2.2510 24572 26517 28979 31354 3.3992 36687 40023 43425 47116 14541 16105 1.7710 1941 2105 2357 25037 21531 3134 34523 3797 24712 27037 20715 22609 22325 35 3.8013 42719 4.5778 51222 2315 50 51120 16250 19920 21719 2.3574 25004 23127 3.000 33417 25425 39703 43278 47171 51417 8.5044 6.1000 8850 7.2579 79111 30231 9392 102451 11.1671 121722 132677 14481 15733 Future value interest factor of $1 per period at i% for n periods, FVIF(I.) Period 0.5 10% 15% 20% 25% 3.0% 35% 4ON 1 SON 5.5% 1.0050 10100 10150 10200 60 65% 10250 10300 10350 10000 10450 ZON 75 BO 10100102011030210404 2 10550 1.0505 10600 10600 10712 10556 10700 10016 10920 10750 3 11025 10100 1.1139 0151103031045710612 1.1234 10789 11742 11007 1.0927 11449 1 1240 11412 11550 11664 4 1.020210400 1051410024 1 1575 1.1742 1.1038 12079 11475 1,1255 11899 1243 1.1925 12597 12155 5 12825 10250 1051010773 1.1041 11314 1 1593 12065 1.3100 12462 13355 1 5877 12167 12763 13005 10304 1.0515100341.1262 13070 6 1.3382 1 1597 1.1941 12290 12053 13701 1 4026 14250 13023 14693 10355107211109011487 1.3788 14185 14591 15002 15433 t 1887 1 2299 12723 15050 13159 13509 14071 1.0407101291126511717 15036 14547 15540 12184 15050 1.6800 1 266 13150 13386 +4221 14775 17138 9 1.045010037 1.14341. 1951 15347 15938 1718 1.6550 1 2489 1.7835 18500 1 3040 1.329 1.4233 14661 15513 1.051111045 1.160512190 12001 16101 10 17626 18895 1 140 14100 18385 1.9172 14202 15530 16289 1.7001 17000 11 1056411157 1177912434 1.3121 18771 1.9672 15395 20510 1 142 14500 21500 16229 17100 1.8021 18980 12 1 091711200 1.1956 12682 19992 21049 22156 1.3449 1.4258 15111 16010 16959 1.7950 23316 1.9012 20122 106TO 1.130112136 12936 21291 23810 22522 1.3705 1.4885 15640 15651 1.7722 10856 25182 2005 21329 14 1.072311495 1201813195 14130 2.2675 24098 2.5064 2.7198 15126 15197 17317 18510 19790 15 1.077711610 125021.3450 21151 14483 24140 2.5785 27524 2.9372 1.5580 16753 10009 19353 20789 1063111726 1269013728 27500 23966 25710 16 17340 1073020224 2.0589 31722 1.4845 1 6047 21829 23553 25404 27390 29522 3.1000 34259 17 100 1.1043 1.260 1.4002 15216 16528 1.7947 19470 21134 22920 24340 26928 29170 2.15 3.4194 18 10939 1 10011307314282 37000 15507 17024 185752025822085 24056 2.6215 28543 31067 3.3799 1 09941208113270 1.4588 3.9950 19 3.6750 1.5987 17535 1 9225 21004 23079 25270 2.1956 30254 33086 36105 3.9515 20 1104912200 1 3469 14859 16385 1 206119090 2.1911 24117 26533 29178 32071 35236 38597 42470 4.5610 21 1.11041232413671 15157 1.679 1.8603 20504 2278825202 27850 2.0782 3.300 3.7527 41400 4.5864 50370 22 1.1160124471.387615460 1.7215 19161 21315 23599 26337 29253 32475 38035 3.9966 4.4304 4.9000 5.4365 1.121512572 1:40041570917846 1.97362 2001 2454727522 30715 34202 3.8197 42564 47405 52771 50715 24 1.12721.2007 1420516084 1 8087 22833 2563328780 2.0328 32251 3.6146 4049 45331 50724 5.6729 63412 25 1.132812824 1.4500 16406 1 0539 20938 23532 2.665020054 33054 2014 4.2019 48277 5.4274 50983 28 1385 12953 1.472716734 1.9003 2156624460 27725 21407 3.5557 40231 45494 5.1415 5.8074 6.5657 73954 27 1.1442130821.4943 17059 1947 22213 25316 28834 32820 37335 42444 48223 5.4757 62139 70474 7,0831 28 11490 13210 15172 17410 1.9965 22879 26202 29987 3.4297 3.9201 44778 51117 58310 5.6488 75759 8.6271 29 1.1556 1.3345 15400 1.7750 20454 23566 271193 1187 35840 41161 47241 5.4184 52107 7.1143 8.1441 5.3173 1 15141347815631 18114 20076 24273 28068 32434 37453 41219 49840 5.7435 6.6144 76123 0.7550 10.0827 31 1.1672 138 1315865 18476 21500 25001 29050 3.373 39139 45380 5251 60881 7040 0.1451 -9.4116 10 571 1.1730 1374916103 18845 22038 25751 3005735081 40900 4760 5.5473 0.4534 7.5022 3.7153 10.1174 117371 33 1.1789 13887 1.63451.9222 22689 2.6523 3.1119 3.5484 42740 50032 50524 6.8400 7.9899 93253 10.0753 126750 34 1.1848 1.4026 155901 9007 2315327319 3220937943 44604 52533 61742 72510 85002 9.9781 11.6920 13.6901 35 1.1907 1.4156168391999923732 28139 3.333639461 46673 55100 6.5138 7661 9.0623 10.5706 12.5609 147853 36 1198714300 1,709120399 24325 2893 3.4503 4103948774 57910 6.0721 1473 9.6513114230 12.5115 1562 37 1202714451 1734 2080724933 29852 15710 42001 50969 6.0814 72501 8.6361 102780 12 2230 145249 17 2456 1 2007 14505 1.760821223 25557 3.0749369504498853262 63855 76400 9.1543 10.9457 13.0793 15.6143 106250 39 31670 3.8254 12107 1.741 17872 2 1047 26190 4915455659 6.7048 8.0095 1994 9.7035 11.6523 16.7853 20 1153 40 32620 39593 12200 1480 1.8100 22080 26851 4601058164 70400 85133 10.2857 124161 14,9745 217245 41 1226015038 1.8412 22522 2.7622 3.3599 40978 993160701 73920 8.9915 109020 132231 160227 19.3916 23.495 42 77616 24007 42413 5 19263516 12330 15180.00022972 28210 94755 115570 140126 17.14) 20.0524 251195 1497 123925340 139692343220915 3.5645 43897 5.400566374 9.9067122505 14.9900 18.3444 27.3868 224163 4 1245415493 125323901 45433 3.5715 561658.9361 2.9530 240175 10.5465 23.5000 12.0855 8.5572 159729196206 09850 11.1256 1.251615646 1.0542 24376 30379 3.7816070245.8412 7.2482 13.7640 170111 210025 240040 31.8204 46 1.25701 aos 1.35 24906 94343 3.1139 3.6950 48069 60143 75744 1735 145905 M741 18.116 224720 27.8477 4.0119 5.0373 6.3170 79153 1.254215963 2.0133 25383 3.1917 9.00 123841 15 4650 19 2944 24.0457 29.933 372320 127051612220435 2587+ 32715 10.4013 41323521366.5705 2715 130153 16 3909 20548525.7200 40 2100 32. 1815 10.9213137830 17 3775 21832276299 345051 12760162832 0741 26300 3353042562 539616833286437 43.4274 43839558407100700026 114674 1283316445 2.1092 20910 34071 145420 104.202 22307284570 37.1897 45050 50545 55598 6.1150 5.7215 T4002 1540) 0940 45 10 BHT 11102 13.100 1410 61418 6.7251 7369 60635 68200 9.6684 10.5000 115026 12.6930 13.000 15 2203 16602 18295 199632 216014 239004 252366 21721 314584 34 37.7194 17454 21.1138 55456 60100 85290 70846 7.6060 B3401 90400 9,8182 10.6520 115503 125467 13.6067 14 7630 160131 173730 188560 20 4501 22.1900 240857 26 13:10 28.3540 307644 3337 36 2167 392051 12.6.392 40 2002 50. 1912 544574 50.000 2507 18.724 20.4140 222512 242530 09127 2003 370 4116 180442 0001 21100 31.4004 34 2.383 37 3175 4.6761 443370 4827 126167 574178 62.50 002179 593) 122000 65650 2017 11.13 1 710011 T012 530140710