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I need the following questions answered briefly (1 or 2 sentences) using the attached excell. I need to know how to calculate it. Please used sheet labeled Average.

• Should you (or a person with similar expectation to yours) buy or rent a property in the area you explored?

• If you were to buy the average property you considered, what would be your imputed rent? In other words, how much would it cost you per month to live in your own home?

• At what price you would need to purchase the average property in order to be indifferent between buying and renting?

• What is the minimum annual rate of property appreciation on the average property in order to be better off buying than renting? Do you think that this rate of appreciation is reasonable?

• What annual rate of property appreciation should you expect on the average property in order for the imputed rent to be zero? Do you think that this expectation is reasonable?

Input Variables Inflation expectation Purchase price Initial monthly rent Rental growth rate Property appreciation Insurance Maintenance Expense growth Marginal tax rate Property tax 3.22% $728,249 $4,070 4.90% 3.00% $10,924 $7,282 3.00% 25.00% $13,553 1 Down payment Loan amount Interest rate (Fixed) Mortgage initiation fee Loan maturity (years) Mortgage Payment Holding period (years) Selling expenses Invetments opportunity 2 3 20% $582,599 3.63% $2,130 30 $2,656.95 6 6.50% 9.00% 4 Option 1: Buy the house Year 0 1 2 3 4 5 6 Out flows Down payment + Origination Insurance & Maintenance Property tax Mortgage payments $ Total: $ 147,780 $ $ $ 18,206 13,553 31,883 $ $ $ 18,752 13,959 31,883 $ $ $ 19,315 14,378 31,883 $ $ $ 19,894 14,809 31,883 $ $ $ 20,491 $ 15,254 $ 31,883 $ 21,106 15,711 31,883 $ 63,642 $ 64,595 $ 65,576 $ 66,587 $ 67,628 $ 68,701 $ 8,623 $ 8,624 $ 8,624 $ 8,623 $ 8,622 $ 8,620 147,780 $ 55,020 $ 55,972 $ 56,953 $ 57,964 $ 59,007 $ 60,081 728,249 145,650 $ $ $ $ 20,939 10,945 750,096 178,442 $ $ $ $ 20,535 $ 11,348 $ 772,599 $ 212,293 $ 20,117 11,767 795,777 247,238 $ $ $ $ 19,683 12,200 819,651 283,311 $ $ $ $ 19,234 $ 12,650 $ 844,240 $ 320,551 $ 18,767 13,116 869,567 358,994 $ 358,994 147,780 In flow Tax benefits $ Overall "out of pocket" $ - Other Interest payment Principal payments House value Total equity $ $ Cash at time sold Option 2: Rent the house Rent expenses Investments portfolio $ $ 147,780 48,840 $ 51,233 $ 53,744 $ 56,377 $ 59,139 $ 62,037 $ 167,260 $ 187,051 $ 207,095 $ 227,321 $ 247,647 $ 267,979 1) http://inflationdata.com/Inflation/Inflation_Rate/Long_Term_Inflation.asp 2) http://chicago.curbed.com/archives/2015/07/01/rents-rising-on-northwest-sid 3) http://www.neighborhoodscout.com/il/chicago/rates/ 4) zillow.com; google.com; smartasset.com Input Variables Inflation expectation Purchase price Initial monthly rent Rental growth rate Property appreciation Insurance Maintenance Expense growth Marginal tax rate Property tax 2.00% $450,000 $2,400 2.50% 2.50% $6,750 $4,500 2.50% 28.00% $7,875 Down payment 20% Loan amount $360,000 Interest rate (Fixed) 4.00% Mortgage initiation fe $3,000 Loan maturity (years) 30 Mortgage Payment $1,718.70 Holding period (years 6 Selling expenses 6.50% Invetments opportunit 8.50% Option 1: Buy the house Year 0 1 2 3 4 5 6 $11,250 $11,531 $7,875 $8,072 $20,624 $20,624 $11,820 $8,274 $20,624 $12,115 $8,481 $20,624 $12,418 $8,693 $20,624 $12,728 $8,910 $20,624 Out flows Down payment + Origination Insurance & Maintenance Property tax Mortgage payments $93,000 Total: $93,000 $39,749 $40,227 $40,718 $41,220 $41,735 $42,263 $0 $6,205 $6,187 $6,169 $6,148 $6,126 $6,102 $93,000 $33,545 $34,040 $34,549 $35,072 $35,609 $36,160 $14,285 $14,026 $13,758 $6,340 $6,598 $6,867 $461,250 $472,781 $484,601 $107,590 $125,719 $144,405 $13,478 $7,147 $496,716 $163,667 $13,187 $12,884 $7,438 $7,741 $509,134 $521,862 $183,523 $203,992 In flow Tax benefits Overall "out of pocket" Other Interest payment Principal payments House value Total equity $450,000 $90,000 Cash at time sold $203,992 Option 2: Rent the house Rent expenses Investments portfolio $28,800 $93,000 $29,520 $30,258 $31,014 $105,650 $119,150 $133,568 $148,979 $31,790 $32,585 $165,461 $183,101 Input Variables Inflation expectation Purchase price Initial monthly rent Rental growth rate Property appreciation Insurance Maintenance Expense growth Marginal tax rate Property tax 2.00% $450,000 $2,400 2.50% 2.50% $6,750 $4,500 2.50% 28.00% $7,875 Down payment 20% Loan amount $360,000 Interest rate (Fixed) 4.00% Mortgage initiation fe $3,000 Loan maturity (years) 30 Mortgage Payment $1,718.70 Holding period (years 6 Selling expenses 6.50% Invetments opportunit 8.50% Option 1: Buy the house Year 0 1 2 3 4 5 6 $11,250 $11,531 $7,875 $8,072 $20,624 $20,624 $11,820 $8,274 $20,624 $12,115 $8,481 $20,624 $12,418 $8,693 $20,624 $12,728 $8,910 $20,624 Out flows Down payment + Origination Insurance & Maintenance Property tax Mortgage payments $93,000 Total: $93,000 $39,749 $40,227 $40,718 $41,220 $41,735 $42,263 $0 $6,205 $6,187 $6,169 $6,148 $6,126 $6,102 $93,000 $33,545 $34,040 $34,549 $35,072 $35,609 $36,160 $14,285 $14,026 $13,758 $6,340 $6,598 $6,867 $461,250 $472,781 $484,601 $107,590 $125,719 $144,405 $13,478 $7,147 $496,716 $163,667 $13,187 $12,884 $7,438 $7,741 $509,134 $521,862 $183,523 $203,992 In flow Tax benefits Overall "out of pocket" Other Interest payment Principal payments House value Total equity $450,000 $90,000 Cash at time sold $203,992 Option 2: Rent the house Rent expenses Investments portfolio $28,800 $93,000 $29,520 $30,258 $31,014 $105,650 $119,150 $133,568 $148,979 $31,790 $32,585 $165,461 $183,101