Megan signs a contract to rent a house and the rent is $1200 per month.Her monthly rent increases each year by the amount of inflation for that year.If,for two years, the inflation rate is 4.5% and...

Megan signs a contract to rent a house and the rent is $1200 per month.Her monthly rent increases each year by the amount of inflation for that year.If,for two years, the inflation rate is 4.5% and 5.1% respectively, find her rent after these two years.

Expert Answers
embizze eNotes educator| Certified Educator

The monthly rent is given as $1200. Each year the rent is increased by the inflation rate. If the first year the inflation rate is 4.5% and the second year the inflation rate is 5.1%, what will be the new rent:

The initial rent is $1200.

After the first year the rent will be (1200)(1.045)=$1254.

(Note that the increase in the rent is given by 4.5% of 1200; this is 4.5% times 1200 or .045(1200)=54. The total rent is the initial rent plus the increase so 1200+54=1254. This can be expressed as 1200+1200(.045) or 1200(1+.045) using the distributive property. Finally this is 1200(1.045) as above.)

After the second year we have 1254(1.051)=1317.954

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The rent will be $1317.95 or $1318 for the third year.

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ishpiro eNotes educator| Certified Educator

For the first year, if the inflation rate is 4.5%, Megan's rent will increase by 4.5% of $1200.

4.5% of $1200 can be calculated using the formula

Part = r*Whole, where r is the percent expressed as a decimal. Here, we are looking for the Part which is 4.5% = 0.045 of Whole, $1200.

4.5% of $1200 will be 0.045*1200 = $54

So, after the first year. Megan's rent will increase by $54 and become

$1200 + $54 = $1254.

For the second year, if the inflation rate is 5.1%, Megan's rent will increase by

5.1% of $1254.

Using the same Part = r*Whole formula, 5.1% of $1254 is

0.051*$1254 = $63.954. Rounded to the nearest cent, this is $63.95.

Thus, after the second year Megan's rent will increase by $63.95 and become

$1254 + $63.95 = $1317.95

After these two years, Megan's rent will be $1317.95 per month.

malkaam | Student

House rent = $1200 per month

Inflation rate first year =  4.5%

Inflation rate second year = 5.1%

Rent for first year increased by = 1200 * 4.5% = 1200 * 0.045 = 54

Rent for first year = 1200 + 54 = 1254

Rent for second year increased by = 1254 * 5.1% = 1254 * 0.051 = 63.954

Rent for second year = 1254 + 63.954 = 1317.954

Rent for first year = 1254

Rent for second year = 1317.954 Answer.