# Total Rent Amount when there is an annual growth rate for rent

• Aug 7th 2011, 07:18 AM
dexteronline
Total Rent Amount when there is an annual growth rate for rent
Say the monthly rent is \$1000 and terms of the rent state that there is an annual increase in rent for 5%. If I were to find the total rent paid in 5 years, how would I do that

I at first tried using FVIFGA, future value interest factor of growing annuity where I used an interest rate of 0% a growth rate of 5% and for 5 period that did not work out

Can anyone here help me out with this one please ?
• Aug 7th 2011, 10:45 AM
Wilmer
Re: Total Rent Amount when there is an annual growth rate for rent
12000*(1.05^0 + 1.05^1 + 1.05^2 + 1.05^3 + 1.05^4) = 66307.575.....

Another way:
12 * [(1000*1.05^5 - 1000*1.05^0) / .05]
• Aug 7th 2011, 11:13 PM
dexteronline
Re: Total Rent Amount when there is an annual growth rate for rent
Quote:

Originally Posted by Wilmer
12000*(1.05^0 + 1.05^1 + 1.05^2 + 1.05^3 + 1.05^4) = 66307.575.....

Another way:
12 * [(1000*1.05^5 - 1000*1.05^0) / .05]

Hey Wilmer, How in the world do you come up with these formulae
Do you teach Business Math some place
Are you an accountant
• Aug 7th 2011, 11:30 PM
Wilmer
Re: Total Rent Amount when there is an annual growth rate for rent
Quote:

Originally Posted by dexteronline
Hey Wilmer, How in the world do you come up with these formulae
Do you teach Business Math some place
Are you an accountant

I'm a retired financial analyst; hence worked quite a bit with financial formulae.
By the way, these are really fairly easy/simple...I ain't no guru!