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April 27th, 2017, 04:37 AM   #1
Joined: Apr 2017
From: Perth

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Answer to a formula

Hello. I am new to this forum but would appreciate advice. I am having an issue with a solicitor about a formula contained in a draft lease to increase the rent. The formula is supposed to increase the rent by 1.5% above the rate of CPI inflation using the following formula:

NR = R+R(CPI%+P)

Where NR = new rent
R= Rent before review
P= Percentage increase

Assuming R=10,000 and CPI =2 and P=1.5 is the following calculation correct?

NR= 10,000 +10,000(2+1.5)

NR= 10,000 + 10,000(3.5)

NR = 10,000 + 35,000

NR = 45,000

If my working above is correct then the formula is incorrect. I will be interested to see if I am correct as it is 30 years since I did maths in school!

Thank you in advance for any replies.
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April 27th, 2017, 05:27 AM   #2
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NR = R + R(CPI + P) = R(1 + CPI + P)

If CPI = 2%, then the formula entry would be 0.02, not 2.

Same for P = 1.5% ... entry value for P would be 0.015, not 1.5.

NR = 10000(1.035) = 10350
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