Reference no: EM132420928

Problem:

Question A: Grouper Company recently signed a lease for a new office building, for a lease period of 12 years. Under the lease agreement, a security deposit of $12,490 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?

Question B: Monty Corporation, having recently issued a $20,006,100, 15-year bond issue, is committed to make annual sinking fund deposits of $619,000. The deposits are made on the last day of each year and yield a return of 10%.

How much will the fund be at the end of 15 years?

Will it be sufficient to payoff the bonds at maturity?

Question C: Under the terms of his salary agreement, president Morgan Walters has an option of receiving either an immediate bonus of $82,500, or a deferred bonus of $105,000 payable in 10 years. Ignoring tax considerations and assuming a relevant interest rate of 4%, which form of settlement should Walters accept and support your answer with calculations?