Your parents are considering renting you an apartment instead of paying room and board at your college. The month to month contract is $539.00/month and the annual contract is $467.00/month. Of you break the annual contract there is va 2 month penalty how much do your parents save if you stay a while year by entering into an annual contract rather than a month to month contract
To stay for a year with a month to month contract, the cost would be:
$539.00/month x 12 months = $6,468.00
To stay for a year with an annual contract, the cost would be:
$467.00/month x 12 months = $5,604.00
If you break the annual contract, there is a 2 month penalty, so the cost would be:
($467.00/month x 10 months) + ($467.00 x 2 months penalty) = $5,604.00 + $934.00 = $6,538.00
Therefore, your parents would save:
$6,468.00 - $5,604.00 = $864.00 if you stay for a year with an annual contract.
If you enter into an annual contract but decide to leave after 5 months how much do your parents lose by not doing the month to month contract
If you enter into an annual contract but decide to leave after 5 months, you would be breaking the contract and there would be a 2 month penalty. Therefore, you would have to pay for 7 months of rent if you were on a monthly contract or for the full 12 months if you were on an annual contract.
If you were on a monthly contract, you would have to pay:
$539.00/month x 7 months = $3,773.00
If you were on an annual contract, you would have to pay:
$467.00/month x 12 months = $5,604.00 (full cost of the contract)
Plus, the 2 month penalty:
$467.00/month x 2 months penalty = $934.00
Total cost of breaking the annual contract early:
$5,604.00 + $934.00 = $6,538.00
Therefore, by entering into an annual contract and breaking it after 5 months, your parents would lose:
$6,538.00 - $3,773.00 = $2,765.00
The answer is 574.00
I apologize for the mistake in my previous answer. Thank you for bringing it to my attention.
Let me recalculate the cost for your parents if you leave after 5 months with an annual contract.
The annual contract cost is $467.00/month for 12 months, which equals to $5,604.00 in total. If you leave after 5 months, your parents would have to pay for the 5 months you have stayed and the 2-month penalty, which is a total of 7 months of rent.
The cost of 7 months for a month-to-month contract would be:
$539.00/month x 7 months = $3,773.00
The cost of breaking the annual contract would be:
($467.00/month x 5 months) + ($467.00/month x 2 months penalty) = $2,335.00 + $934.00 = $3,269.00
Therefore, your parents would save:
$3,773.00 - $3,269.00 = $504.00 by entering into an annual contract over a month-to-month contract if you leave after 5 months.
I apologize for any confusion my previous answer might have caused.
To calculate how much your parents would save by entering into an annual contract rather than a month-to-month contract, you need to compare the total cost of each option. Here's how you can calculate it:
1. Calculate the total cost for a year under the month-to-month contract:
Total Cost for a year = Monthly Rent x 12
Total Cost for a year = $539.00/month x 12 = $6,468.00
2. Calculate the total cost for a year under the annual contract:
Total Cost for a year = Annual Rent + Penalty for Breaking the Contract
Total Cost for a year = ($467.00/month x 12) + ($467.00/month x 2)
Total Cost for a year = $5,604.00 + $934.00 = $6,538.00
3. Calculate the savings by entering into an annual contract:
Savings = Total Cost (Month-to-Month) - Total Cost (Annual)
Savings = $6,468.00 - $6,538.00
Savings = -$70.00
Based on the calculations, if you stay for a whole year, your parents would actually save money by entering into the month-to-month contract instead of the annual contract. The savings would be $70.00 in this case.