Based on the following data, would you recommend buying or renting?

Rental Costs			Buying Costs
Annual rent	$	7,380	Annual mortgage payments	$	9,800	($9,575 is interest)
Insurance	$	145	Property taxes	$	1,780
Security deposit	$	650	Down payment/closing costs	$	4,500
			Growth in equity	$	225
			Insurance/maintenance	$	1,050
			Estimated annual appreciation	$	1,700

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.)

b. Would you recommend buying or renting?

• Renting

• Buying