Question

Wildhorse 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.

Answer 1

Ans:

Computation of the amount received by DW Company As Follows

The amount to be received at the end of Year 11=Principal *Compound interest factor @5% for 11 years

=$12,290*1.71034=$21020.0786

Thus Amount receivable by DW company after 11 years is $21020 (If rounded off)

Table:

Year	Compounded Interest Factor @5%
1	1.05
2	1.1025
3	1.1576
4	1.2155
5	1.27628
6	1.340095
7	1.4071
8	1.477455
9	1.551328
10	1.6288946
11	1.7103393
12	1.795856