Question

Windsor Company recently signed a lease for a new office building, for a lease period of 11 years. Under the lease agreement, a security deposit of $12,290 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 5% per year.

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What amount will the company receive at the time the lease expires? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

The company will receive

$enter a dollar amount rounded to 0 decimal places

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Attempts: 1 of 3 used

(b1)

Sheridan Corporation, having recently issued a $20,083,600, 15-year bond issue, is committed to make annual sinking fund deposits of $607,200. The deposits are made on the last day of each year and yield a return of 10%.

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Will the fund at the end of 15 years be sufficient to retire the bonds?

Future value of an ordinary annuity		$enter a dollar amount rounded to 0 decimal places
Will funds be sufficient?

Answer 1

a
Amount of security deposit	12290
X FV factor of $1	1.71034	=(1.05)^11
The company will receive	21020
b1
Annual sinking fund deposits	607200
X FV factor of $1 annuity	31.77248	=((1.10)^15-1)/0.10
Future value of an ordinary annuity	19292250
No, the funds will not be sufficient