Question

Teresa rents her apartment for $642 per month, utilities not included. When she moved in, she...

Teresa rents her apartment for $642 per month, utilities not included. When she moved in, she paid a $730 security deposit using money from her savings account that was paying 4% interest. Her renter's insurance costs her $57 per year. What are Teresa's total annual costs of renting?
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Answer #1

Teresa Rent per month = 642

Teresa rent per year = Monthly Rent * Number of Month

= 642*12

= $7704

Security Deposit - 730

Interest - 4%

So, Interest Lost = 4% * 730

= $29.2

Insurance Cost Per year -$57

So, Annual Cost of Renting = Annual Rent + Interest Cost Per year + Insurance Cost

= 7704 + 29.2 + 57

= $7788.2

Note: We don't include the security deposit in annual cost because it is receivable at the time you left the apartment, only the interest cost per year will be included as it opportunity cost.

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