Answer:
Next years annual lease payments=$129,240
Explanation:
<em>Step 1: Determine next years salary</em>
Since next year, the sales salary will have increase by 7%, we can determine next years annual sales as shown;
F=P(1+R)
where;
F=next years salary
P=this years salary
R=salary increase rate
In our case;
F=unknown, to be determined
P=190,000 per month
P=(190,000×12)=$2,280,000 annually
R=5%=5/100=0.05
replacing;
F=2,280,000(1+0.05)=$2,394,000
<em>Step 2: Determine next years rent</em>
Next years rent=0.05×2,394,000=$119,700
<em>Step 3: Determine insurance, maintenance, utilities and total annual taxes</em>
Total=annual insurance payments+annual maintenance payments+annual utilities payments+annual taxes
Total=(300×12)+(75×12)+(300×12)+(120×12)=$9,540
<em>Step 4: Determine next years annual lease payments</em>
Next years annual lease payments=next years rent payment+ insurance+maintenance+utilities+annual taxes
where;
next years rent payment=$119,700
insurance+maintenance+utilities+annual taxes=$9,540
replacing;
Next years annual lease payments=(119,700+9,540)=$129,240
Next years annual lease payments=$129,240
