Question

Dwayne Wade 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 $12,000 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 5% per year.
What amount will the company receive at the time the lease expires?

Answer 1

Answer:

The correct answer is "$19,546.74".

Explanation:

The given values are:

Amount,

= $12,000

Years,

= 10

Interest rate,

= 10%

Now,

The future value will be:

⇒  $Future \ value=Amount\times (1+Rate)^{Years}$

On substituting the given values in the above formula, we get

⇒                        $=12000\times (1+5 \ percent)^{10}$

⇒                        $=12000\times (1+0.05)^{10}$

⇒                        $=12000\times (1.05)^{10}$

⇒                        $=19,546.74$ ($)