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If the annual interest rate is 6%, at what rate must rental cost increase each year to make the cost of renting comparable to purchasing?

Finance Basics

You are considering purchasing a warehouse. The cost to purchase the warehouse is $500,000. Renting the equivalent space costs $20,000 per year. If the annual interest rate is 6%, at what rate must rental cost increase each year to make the cost of renting comparable to purchasing?

 

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