Question

HELP!!! 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?

a. $13,200
b. $22,000
c. $31,390
d. $32,440

Answer 1

Answer: c. $31,390

Explanation:

Accumulated amount after t years (if compounded annually)=
`A=P(1+r)^t`, where P = Principal value , t= time , r = rate of interest.

Given : P= $29,000

r= 2% =0.02

t= 4 years

`A=29000(1+0.02)^4=29000(1.02)^4`

`=29000*1.08243216\approx31390`

Hence, the annual rent at the end of four years= $31,390

So, the correct option is C.