Brief Exercise A-3 Liam Company signed a lease for an office building for a peri
ID: 2523967 • Letter: B
Question
Brief Exercise A-3
Liam Company signed a lease for an office building for a period of 12 years. Under the lease agreement, a security deposit of $9,600 is made. The deposit will be returned at the expiration of the lease with interest compounded at 4% per year.
Click here to view the factor table.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
What amount will Liam receive at the time the lease expires? (Round answer to 2 decimal places, e.g. 25.25.)
$
Amount at the time the lease expires$
Explanation / Answer
We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
Hence
A=$9600(1.04)^12
=$9600*1.60103
which is equal to
=$15369.89(Approx).
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