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Reginald is about to lease an apartment for 30 months. The landlord wants him to make...

Reginald is about to lease an apartment for 30 months. The landlord wants him to make the lease payments at the start of the month. The monthly payments are ​$1,600 per 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 ​$42,864. What is the implied monthly discount rate for the​ rent? If Reg is earning 0.6​% 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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Answer #1

Hence, implied monthly discount rate for the​ rent is 0.80%

He should pay in one-time payment as it earns at 0.80% which is higher than his current earnings rate (6%).

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