Rent increase

Calculate how much rent should be increased each year to keep pace with annual inflation of 7%. The rent in the first year is €550. Calculate the correct rent for each of the first 5 years so that the real value of the rent remains constant.

Final Answer:

a2 =  588.5 eur
a3 =  629.695 eur
a4 =  673.7737 eur
a5 =  720.9378 eur
a6 =  771.4035 eur

Step-by-step explanation:

a1=550 eur r=100%+7%=1+1007=1.07  a2=r a1=1.07 550=588.5 eur
a3=r a2=1.07 588.5=629.695 eur
a4=r a3=1.07 629.695=673.7737 eur
a5=r a4=1.07 673.7737=720.9378 eur
a6=r a5=1.07 720.9378=771.4035 eur



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