Answer:
2756.25 This is what he will pay going into the third year.
Step-by-step explanation:
This is not as simple as it looks. Is the base number always 2500 no matter how many years go by?
Or do you compound the rent after each Year.
Simple Interest
Rent after the first year
Rent after first year = 2500 + 5%*2500
Rent after first year = 2500 + 125
Rent after first year = 2625
The rent after the second year will be the same.
Compound interest.
Rent after first year is 2625
At the end of the second year it will be 2625 + 2625*5%
Second year payment = 2625 + 2625*5/100
Second year payment = 2625 + 131.25
Second year payment = 2756.25
