MATH SOLVE

6 months ago

Q:
# Exequiel wants to rent his apartment and in the lease he indicates to his tenant that the value would increase by 5% each year from the date of the contract. After two years, he receives $458,070 in rent. What was the rental value at the beginning of the contract?

Accepted Solution

A:

Let's denote the initial rental value as "R". According to the lease agreement, the value would increase by 5% each year. So, after the first year, the rental value would be 1.05 * R, and after the second year, it would be (1.05 * R) * 1.05 = 1.05^2 * R.
After two years, Exequiel received $458,070 in rent, which is equal to the rental value after two years:
1.05^2 * R = $458,070
Now, we can solve for the initial rental value "R":
R = $458,070 / (1.05^2)
Calculating this:
R = $458,070 / 1.1025
R β $415,000
So, the initial rental value at the beginning of the contract was approximately $415,000.