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It Costs WHAT?!
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THE SCENARIO
Back in July of 2015, I rented a storage unit to store some 'treasures' that wouldn't fit once I moved into a much smaller place. At the time, the rent was $108 per month.
Yesterday, I got a letter in the mail letting me know about a rent increase (they tend to do one each year or so), effective on July 1st of 2019. The new rent will be $215 per month.
The question: What has the average annual percentage increase in rent been over the past 4 years? Assume monthly compounding.
THE SOLUTION
This one is straightforward.
First things first, make sure the calculator is using 12 Payments per Year.
N: 48 (July 2015 to July 2019 is 4 years, or 4 x 12 = 48 months)
I/YR: (This is what I'm trying to find)
PV: -108 (The original rent was $108 per month)
PMT: 0 (This is an inflation-style question, and those don't have money flowing in or out each month)
FV: 215 (The new rent is $215 per month)
On average, the rent has gone up 17.34% per year.
What do they think they are, a hospital or university? That rate
significantly outstrips inflation!
What do you think? Would you put up with that kind of rent increase? If not, what would you do if you were in my position? Let us know in the comments!
