Chapter 11.5, Problem 6P

To determine

To calculate: Total rented amount paid by the person K over the past six years.

Answer to Problem 6P

Total rented amount paid by the person K over the past six years was $9189.227525.

Explanation of Solution

Given information: The amount of the rent is $600 per moths and the annual increment of the rent is 5% per years.

Therefore, the total amount of 1 year:

  $\begin{array}{l}=12\times 600\\ =\$7200\end{array}$

Formula used:

Rent amount of 5 years = Amount of 1 year × ${\left(1+\frac{\text{Increment}\text{rate}}{100}\right)}^{\text{Numbers of years}}$

Calculation:

Rent amount of 5 years $=7200\times {\left(1+\frac{5}{100}\right)}^5$

  $=7200\times {\left(1+\frac{1}{20}\right)}^5$

  $=7200\times \frac{21}{20}\times \frac{21}{20}\times \frac{21}{20}\times \frac{21}{20}\times \frac{21}{20}$

  $=\frac{7200\times 4084101}{3200000}$

  $\begin{array}{l}=\frac{72\times 4084101}{32000}\\ =\$9189.22725\end{array}$

Hence, total rented amount paid by the person K over the past six years was $9189.227525.