You are the financial planner for Johnson Controls. Assume last year's profits were $880,000. 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 $1,490,000. 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 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 8 years? Future Value

2. National Business Machine Co. (NBM) has $4.9 million of extra cash after taxes have been paid.  NBM has two choices to make use of this cash.  One alternative is to invest the cash in financial assets.  The resulting investment income will be paid out as a special dividend at the end of three years.  In this case, the firm can invest in either Treasury bills yielding 3% or 5% preferred stock.  IRS regulations allow the company to exclude from taxable income 70% of the dividends received from investing in another company's stock.  Another alternative is to pay out the cash now as dividends.  This would allow the shareholders to invest on their own in Treasury bills with the same yield or in preferred stock.  The corporate tax rate is 21%.  Assume the investor has a 31% personal income tax rate, which is applied to interest income and preferred stock dividends.  The personal dividend tax rate is 15% on common stock dividends.  Should the cash be paid today or in three years?  Which of…