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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 Preview


    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 = ...

    Solution Summary

    A compounding interest problem is solved and explained.