Question

Your parents are renting an apartment for you when you go away to college. An annual contract is $502.00/month with a 2-month penalty if you break the lease. The month-to-month contract is $615.00/month. Say you leave after 6 months. How much is the difference in the amount paid between the two contracts?

Answer 1

4016 for 6 months plus 2 month penalty for the annual contract

3690 for month to month contract

Difference 326 less from the month to month

Answer 2

The difference in the amount paid between the two contracts is $326.

Explanation:

Given : An annual contract is $502.00/month with a 2-month penalty if you break the lease. The month-to-month contract is $615.00/month. Say you leave after 6 months.

To find : How much is the difference in the amount paid between the two contracts?

Solution :

Annual contract: The annual contract means a contract for 12 months. There is a month penalty for breaking the lease.

In our case the penalty is 2 month means if you left after 6 months, you will have to pay for 8 month.

Total paid = Monthly payment × 8

Total paid = 502 × 8 = $4016

Month-to-month contract: The payment is for actual month stayed.

You will only paid for the 6 months you stayed,

Total paid = Monthly payment × 6

Total paid = 615 × 6= $3690

To get the difference in the amount paid between the two contracts is

Difference = Annual contract - Month-month contract

Difference = 4016 - 3690 = $326

Therefore,The difference in the amount paid between the two contracts is $326.