Enter the agreed rent price ($) and the free market price ($) into the calculator to determine the Economic Rent.
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Economic Rent Formula
The following formula is used to calculate the Economic Rent.
Re = AP - FMP
- Where Re is the Economic Rent ($)
- AP is the agreed rent price ($)
- FMP is the free market price ($)
To calculate the economic rent, subtract the free market price by the agreed rent price.
How to Calculate Economic Rent?
The following example problems outline how to calculate Economic Rent.
Example Problem #1:
- First, determine the agreed rent price ($). In this example, the agreed rent price ($) is given as 2500.
- Next, determine the free market price ($). For this problem, the free market price ($) is given as 2000.
- Finally, calculate the Economic Rent using the equation above:
Re = AP – FMP
The values given above are inserted into the equation below:
Re = 2500 – 2000 = 500 ($)
Example Problem #2:
The variables needed for this problem are provided below:
agreed rent price ($) = 2250
free market price ($) = 2100
Entering these values and solving gives:
Re = 2250 – 2100 = 150 ($)
