Question
Based on the following data, would you recommend buying or renting? Rental Costs Buying Costs Annual rent $ 8,180 Annual mortgage payments $ 10,500 (9,975
Based on the following data, would you recommend buying or renting? |
Rental Costs Buying Costs | ||||||
Annual rent | $ | 8,180 | Annual mortgage payments | $ | 10,500 | (9,975 is interest) |
Insurance | $ | 225 | Property taxes | $ | 2,100 | |
Security deposit | $ | 1,450 | Down payment/closing costs | $ | 5,200 | |
Growth in equity | $ | 525 | ||||
Insurance/maintenance | $ | 1,850 | ||||
Estimated annual appreciation | $ | 2,500 | ||||
Assume an after-tax savings interest rate of 6 percent and a tax rate of 28 percent. Assume this individual has other tax deductions that exceed the standard deduction amount. |
a. | Calculate total rental cost and total buying cost. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) |
Rental cost | $ | |||
Buying cost | $ | |||
2.
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