Question

The manager of an apartment building increases the monthly rent of each apartment by 3% each year. At the beginning of year 1, the monthly rent of an apartment was $500. What was the monthly rent of the apartment at the beginning of year 3?

a) $546.36
b) $530.45
c) $515.00
d) $530.00

Answer 1

To find the monthly rent of the apartment at the beginning of year 3, we need to calculate the rental increase for each year and add it to the initial rent. The monthly rent at the beginning of year 3 is $530.45.

Step-by-step explanation:

To find the monthly rent of the apartment at the beginning of year 3, we need to calculate the rental increase for each year and add it to the initial rent. Given that the rent increases by 3% each year, the monthly rent at the beginning of year 2 would be:

$500 + ($500 imes 0.03) = $515

To find the monthly rent at the beginning of year 3, we repeat the process:

$515 + ($515 imes 0.03) = $530.45

Therefore, the monthly rent of the apartment at the beginning of year 3 is $530.45 (option b).