6. Problem 6 (2x value) A couple in Regina, Saskatchewan, must decide whether it is more economical to buy a home or to continue to rent The couple rents a one-bedroom duplex for $460 a month plus $150 per month for basic utilities. Rent is expected to rise 2% each year, and utilities are expected to rise 5% each year. Rent and utilities costs only rise at the end of each year. So in year 1, for example, the sent will be $460 each and every month But the rent will be higher in year 2, and so on. The couple would like to buy a home that costs $90,000. A local mortgage company will provide a loan that requires a down payment of 5%. If they buy the house, the realtor will also charge a sales commission of 5% of the value of the purchase, payable immediately. The couple would select a 30-year fixed-rate mortgage with an 7% interest rate. It is estimated that the basic utilities, home insurance, and maintenance costs will be $300 each month, and will dise 5% every year but will only rise once per year, at the end of the year). The home will appreciate in valve 4.5% a year. If they buy a home, assume they will sell it in 10 years. a) Choose a discount rate to apply for net present worth analysis. Justify you decision to choose this discount rate. b) Analyze both options using net present worth analysis over a 10-year period. Which alternative should the couple select: The problem is missing a piece of infomation that you would need to properly assess the options. What is it, and why is it necessary? 6. Problem 6 (2x value) A couple in Regina, Saskatchewan, must decide whether it is more economical to buy a home or to continue to rent The couple rents a one-bedroom duplex for $460 a month plus $150 per month for basic utilities. Rent is expected to rise 2% each year, and utilities are expected to rise 5% each year. Rent and utilities costs only rise at the end of each year. So in year 1, for example, the sent will be $460 each and every month But the rent will be higher in year 2, and so on. The couple would like to buy a home that costs $90,000. A local mortgage company will provide a loan that requires a down payment of 5%. If they buy the house, the realtor will also charge a sales commission of 5% of the value of the purchase, payable immediately. The couple would select a 30-year fixed-rate mortgage with an 7% interest rate. It is estimated that the basic utilities, home insurance, and maintenance costs will be $300 each month, and will dise 5% every year but will only rise once per year, at the end of the year). The home will appreciate in valve 4.5% a year. If they buy a home, assume they will sell it in 10 years. a) Choose a discount rate to apply for net present worth analysis. Justify you decision to choose this discount rate. b) Analyze both options using net present worth analysis over a 10-year period. Which alternative should the couple select: The problem is missing a piece of infomation that you would need to properly assess the options. What is it, and why is it necessary