Question

Part 1 Riverbed Company recently signed a lease for a new office building for a lease period of 10 years. Under the lease agreement, a security deposit of $14.930 is made with the deposit to be returned at the expiration of the lease, with interest compounded at 5% per year. Click here to view factor tables What amount will the company receive at the time the lease expires? (Round factor values to 5 decimal places, eg. 1.25124 and final answer to O decimal places, e.g. 458,581.) The company will receive $ eTextbook and Media Save for Later Attempts: 0 of 15 used Submit Answer Part 2 Marin Corporation, having recently issued a $20,054,300, 15-year bond issue, is committed to make annual sinking fund deposits of $616,500. The deposits are made on the last day of each year and yield a return of 10%. Click here to view factor tables Will the fund at the end of 15 years be sufficient to retire the bonds? A Future value of an ordinary annuity Will funds be sufficient?

Answer 1

1
Amount of Security deposit	14930
X FV factor	1.62889	=(1.05)^10
The company will receive	24319
2
Annual deposits	616500
X FV factor	31.77248	=((1.10)^15-1)/0.10
Future value of an ordinary annuity	19587734
No, the funds will not be sufficient
3
Bonds value	20054300
Less: Future value of an ordinary annuity	19587734
Deficiency	466566
4
Deferred bonus	77000
X PV factor	0.67556	=1/1.04^10
Present value of Deferred bonus	52018
Accept Immediate bonus