Exercise 6-6

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 $14,110 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? (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

$enter a dollar amount rounded to 0 decimal places

Oriole Corporation, having recently issued a $20,139,700, 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%.

Will the fund at the end of 15 years be sufficient to retire the bonds?

Future value of an ordinary annuity $enter a dollar amount rounded to 0 decimal places

Will funds be sufficient?

select between Yes and No

Oriole Corporation, having recently issued a $20,139,700, 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%.

Determine the amount of deficiency. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Deficiency

$enter a dollar amount rounded to 0 decimal places

Under the terms of his salary agreement, president Alan Walters has an option of receiving either an immediate bonus of $77,000, or a deferred bonus of $98,000 payable in 10 years.

Ignoring tax considerations and assuming a relevant interest rate of 4%, which form of settlement should Walters accept?

Present value of deferred bonus $enter a dollar amount rounded to 0 decimal places

select an option