Question

A person who travels outside the country leaves a rental property for 5 years, with the condition that $4,500.00 per quarter is paid every end of the month, which will be deposited in a savings account that pays 8% compounded quarterly. What is the current value of the rental contract.

267

likes
1336 views

Answer to a math question A person who travels outside the country leaves a rental property for 5 years, with the condition that $4,500.00 per quarter is paid every end of the month, which will be deposited in a savings account that pays 8% compounded quarterly. What is the current value of the rental contract.

Expert avatar
Sigrid
4.5
115 Answers
To find the current value of the rental contract, we need to calculate the future value of each quarterly payment and then sum them up.

First, let's calculate the future value of each quarterly payment using the compound interest formula:

A = P(1 + \frac{r}{n})^{nt}

Where:
A = future value
P = principal (quarterly payment)
r = annual interest rate (8% = 0.08)
n = number of compounding periods per year (quarterly = 4)
t = time in years

Let's substitute the given values into the formula:

A = 4500(1 + \frac{0.08}{4})^{4 \times 5}

Simplifying the exponent:

A = 4500(1 + 0.02)^{20}

Calculating the value inside the parentheses:

A = 4500(1.02)^{20}

Using a calculator or computer, we can find that:
(1.02)^{20} \approx 1.485947

Substituting this value back into the formula:

A \approx 4500 \times 1.485947

Calculating the result:

A \approx 6,686.26

Therefore, the current value of the rental contract is approximately $6,686.26.

Frequently asked questions (FAQs)
What is the probability of drawing 2 red marbles from a bag containing 5 red and 3 blue marbles?
+
Question: Find the unit vector in the direction of the vector .
+
Math question: Solve for x: log2(4x) + log2(2x) = 4
+
New questions in Mathematics
How much volume of water in MegaLiters (ML) is required to irrigate 30 Hectare crop area with depth of 20mm?
Determine all solutions to the inequality |2x + 6| − |x + 1| < 6. Write your final answer in interval notation
I need .23 turned into a fraction
Determine the equations of the recipes that pass through the following pairs of points P1 (2;-1) and p2 (4;-1)
(2x+5)^3+(x-3)(x+3)
A person borrows rm 1000 from a bank at an interest rate of 10%. After some time, he pays the bank rm 1900 as full and final settlement of the loan. Estimate the duration of his loan.
In the telephone exchange of a certain university, calls come in at a rate of 5 every 2 minutes. Assuming a Poisson distribution, the average number of calls per second is: a) 1/8 b) 1/12 c) 1/10 d) 2/5 e) 1/24
A triangular window has a base of 6 ft. and a height of 7 ft. What is its area?
The market for economics textbooks is represented by the following supply and demand equations: P = 5 + 2Qs P = 20 - Qd Where P is the price in £s and Qs and Qd are the quantities supplied and demanded in thousands. What is the equilibrium price?
19) If the temperature of -8°C decreases by 12°C, how much will it be? a)-20°C -4°C c) 4°C d) 20°C
The simple average of 15 , 30 , 40 , and 45 is
The question is using rule 72 determine Kari wants to save 10,000 for a down payment on a house. Illustrate the difference in years it will take her to double her current 5,000 savings based on 6%, 12% and 18% interest rate .
-1%2F2x-4%3D18
Calculate the difference between 407 and 27
Twenty‐five students in a class take a test for which the average grade is 75. Then a twenty‐sixth student enters the class, takes the same test, and scores 70. The test average grade calculated with 26 students will
Kaya deposits 25,000 into an account that earns 3% interest compounded monthly. How much does Kaya have in the account after 6 years 8 months? Round to the nearest cent. 32,912.50 30,000 29,923.71 30,527.45
Translate to an equation and solve. Let x be the unknown number: What number is 52% of 81.
For how long does the principal amount of €7,537 bring the same interest as the principal amount of €12,345 invested for 8 months? Interest calculation is simple and decursive.
How many digits are there in Hindu-Arabic form of numeral 26 × 1011
Slope (7,3) and (9,5)