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.

Ben and Carla Covington plan to buy a condominium. They will obtain a $156,000, 30-year mortgage at 8.0 percent. Their annual property taxes are expected to be $2,100. Property insurance is $540 a year, and the condo association fee is $250 a month. Based on these items, determine the total monthly housing payment for the Covingtons. Use Exhibit 7-7. (Round your intermediate calculations and final answer to 2 decimal places.)

Total monthly housing payment

$

Exhibit 7-7 Mortgage Payment Factors (principal and interest factors per $1,000 of loan amount) 30 Years $4.22 4.49 4.77 5.07 5.37 5.68 6.00 6.32 6.65 6.99 7.34 25 Years $4.74 5.01 5.28 5.56 5.85 6.14 6.44 6.67 7.06 7.39 7.72 20 Years $5.55 5.80 6.06 6.33 6.60 6.88 7.16 7.45 7.75 8.06 8.36 15 Years $6.91 7.15 7.40 7.65 7.91 8.17 8.43 8.71 8.98 9.27 9.56 Term Rate 3.0% 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0