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Financial Accounting : Compounding Interest

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BE2-19 Porter Company signed a lease for an office building for a period of 10 years. Under
the lease agreement, a security deposit of $10,000 is made. The deposit will be returned at the
expiration of the lease with interest compounded at 5% per year. What amount will Porter receive
at the time the lease expires?

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Solution Summary

A compounding interest problem is solved and explained.

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Assume the $10,000 is deposited at time t=0 then after one year (t=1) the deposit will have accumulated to $10,000 x 1.05 = ...

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