Question

You have the opportunity to lease space for your business. The property owner has proposed a four-year lease with a rent of $29,000 per year. If a proposed rent increase is 2% per year what will the annual rent be at the end of four years?

Answer 1

To determine the annual rent after a four-year lease with a 2% increase per year, the rent is compounded yearly. Starting with $29,000, the rent becomes approximately $30,775.03 by the end of the fourth year.

Step-by-step explanation:

To determine the annual rent at the end of a four-year lease with a 2% annual rent increase, we can calculate the compounded rent for each year. Starting with an initial rent of $29,000, we apply the 2% increase each year to find the new rent.

Year 1: $29,000 (initial rent)

Year 2: $29,000 × (1 + 0.02) = $29,580

Year 3: $29,580 × (1 + 0.02) = $30,171.60

Year 4: $30,171.60 × (1 + 0.02) = $30,775.03 (rounded to the nearest cent)

Therefore, the annual rent at the end of the four years will be approximately $30,775.03.

Answer 2

$31,390

Step-by-step explanation: