Question
Annuity Due - Reginald is about to lease an apartment for 12 months. The landlord wants him to make the lease payments at the start
Annuity Due - Reginald is about to lease an apartment for 12 months. The landlord wants him to make the lease payments at the start of the month. The monthly payments are $1,500 a month. The landlord says he will allow Reg to prepay the rent for the entire lease with a discount. The one-time payment due at the beginning of the lease is $17,516. What is the implied monthly discount for the rent? If Reg is earning 1.0% on his savings monthly, should he pay by month or make the one-time payment?
- What is the implied monthly discount rate for the rent?
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