Your Lease Calls for Payments of $500 at the End

question 97

Multiple Choice

Your lease calls for payments of $500 at the end of each month for the next 12 months.Now your landlord offers you a new 1-year lease which calls for zero rent for 3 months,then rental payments of $700 at the end of each month for the next 9 months.You keep your money in a bank time deposit that pays a simple annual rate of 5 percent.By what amount would your net worth change if you accept the new lease? (Hint: Your return per month is 5%/12 = 0.4166667%. )

• A) −$509.81
• B) −$253.62
• C) +$125.30
• D) +$253.62
• E) +$509.81