1. You are considering an option to rent or to purchase a single-family house. You can rent it for S1,500 per month. If you rent the property, the current owner will be responsibl maintenance, property insurance and taxes. Your second option is to purchase the property for other 80% with a fixed-rate mortgage at a four percent interest rate. Assume that the mortgage would fully amortize over thirty years. You can prepay the mortg penalty You have enough money for a 20% down payment, and would need to finance the age at any time without a would Assume that the property will appreciate at four percent per year, and that the owner plan to increase the rent at a rate of three percent per year during the next five years. Assume that maintenance is $3,000 per year. Property insurance runs maintenance and insurance are anticipated to increase at a rate of four percent per year during the next five years S1,000 per year. Both If you purchase the house, you plan to stay in it for at least four years, but because of the possibility of your job moving you to another city, you want to analyze how long you must stay in the house to make purchasing a better option than renting. If you do purchase the property and sell it, you will incur a seven percent sales charge. In regard to taxes, property taxes are about four percent of the home value, which is re- assessed each year. You are in the 28% marginal income tax bracket. a) If you would like to earn an eight percent rate of return on your invested equity, would it be better to rent or to buy the property, if your investment horizon is four years? What would be your expected rate of return if you lived in the house for only three years? begin now that would make you indifferent between renting and purchasing the property? b) c) If you expected to live in the house for five years, what would be the level of rent to