Question: Reginald is about to lease an apartment for the year
Reginald is about to lease an apartment for the year. The landlord wants the lease payments paid at the start of the month. The twelve monthly payments are $1,300 per month. The landlord says he will allow Reginald to prepay the rent for the entire year with a discount. The one-time annual payment due at the beginning of the lease is $14,778. What is the implied monthly discount rate for the rent? If Reginald is earning 1.5% on his savings monthly, should he pay by month or take the one annual payment?
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