Question

A owner increases the rent of his house by 5% at the end of each year. If currently its rent is Rs. 2500 per month, how much will be the rent after 2 years?

Answer 1

Current Rent = 2500/-
Next year rent = 2500 × 5/100 = 125 + 2500 = 2625
2 year after rent = 2625 × 5/100 = 131.25 + 2625 = 2756.25

Answer 2

Answer:

2756.25 Rs. per month.

Step-by-step explanation:

The per month rent remains the same throughout the year and at the end of the years, it is increased by 5%.

So, it is clear that the rent is compounded every year.

And within two years the rent will be compounded two times.

If the current rent is 2500 Rs. per month, then after 2 years, the rent per month will be 2500[1+(5/100)]²=2500(1.05)²=2756.25 Rs. per month. (Answer)