eBook hapter 5 ritical Thinking Case 3 ophia's Rent-or-Buy Decision Sophla Harris is a single woman in her late 20s. She is renting an apartment in the fashionable part of town for $1,100 a month. After much thought, she's seriously considering buying a condominium for $175,000. She intends to put 20 percent down and expects that closing cost wn amount to anothe SS Oicommer al bank has iereed to led her money at the fixed rate of 6 percent on a 15-year mortgage. Sophia would have to pay an annual condominium owner's insurance premium of $560 and property taxes of $1,100 year (she's now paying renter's insurance of $550 per year). In addition, she estimates that annual maintenance expenses ill be about 0.5 percent of the price of the condo (which includes a $30 monthly fee to the property owners' association). Sophia's income puts her in the 25 percent tax bracket (she itemizes her deductions on her tax retums), and she earns an after-tax rate of return on her investments of around 4 percent 1. Given the information provided, use Worksheet 5.2 to evaluate and compare Sophia's alternatives of remaining in the apartment or purchasiog the condo. Round the answers to the nearest dollar. (Note: Assume Sophia's security deposit is equal to one month's rent.) Round your answers to the nearest cent. Annual ownership cost Annual rental cost 2. Working with a friend who is a realtor, Sophia has learned that condos lke the one she's thinking of buying are appreciating in value at the rate of 3.5 percent a year and are expected to continue doing so. Would such information affect the rent-or-buy decision made in Question 17