Will funds be sufficient? Kingbird Company recently signed a lease for a new off

Question

Will funds be sufficient?

Kingbird 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 $12,950 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 $

Explanation / Answer

a)future value=present*(1+i)^n
=12950*(1+5%)^10
=21094
b)the factor to be used is pmt
=(1-(1+i)^-n)/i
here i=10% n=15
=31.7725
The futue value of annuity=622600*31.7725=19781558.50
It wont be sufficent and deficency is
c)Deficiency=(20007300)-19781558.50
=225741.5
d)present value of deferred bonus=77000/((1+4%)^10)
=52018.44
He should receive immediate bonus since that value is higher

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