Esme Reynolds is in her late $20$ s$.$ She is renting an apartment for $$1,700$ a month. After much thought, she's seriously considering buying a condominium for $$335,000.$ She intends to put $20$ percent down and expects that closing costs will amount to another $$11,000.$ A bank has agreed to lend her money at the fixed rate of $5$ percent on a $15-$year mortgage. Esme would have to pay an annual condominium owner's insurance premium of $$680$ and property taxes of $$3,300$ a year $($she$\text{'}$s now paying renter's insurance of $$550$ per year$).$ In addition, she estimates that annual maintenance expenses will be about $0\mathrm{.}5$ percent of the price of the condo $($which includes a $$30$ monthly fee to the property owners' association$).$ Esme's income puts her in the $24$ percent tax bracket $($she does not itemize her deductions on her tax returns$),$ and she earns an after$-$tax rate of return on her investments of around $4$ percent. Assume that the standard deduction for a single person is $$12,950.$

Given the information provided, use Worksheet $5\mathrm{.}2$ to evaluate and compare Esme's alternatives of remaining in the apartment or purchasing the condo. $($Note: Assume Esme does not have any security deposit.$)$ Round your answers to the nearest cent.

Annual ownership cost:

Annual rental cost:

$

$

Working with a friend who is a realtor, Esme has learned that condos like the one she's thinking of buying are appreciating in value at the rate of $3\mathrm{.}5$ percent a year and are expected to continue doing so$.$ Would such information affect the rent$-$or$-$buy decision made in Question $1?$

$$

Describe any other factors that should be considered when making a rent$-$or$-$buy decision. Location must be considered. If the purchase unit $$ near public transportation, there may be additional transportation costs to consider.

$-$Selectthan three years, renting will probably be the better alternative. If she will stay in the location for $-$Select$-$Y than three years, the appreciation will probably cover the cost of selling at a future date.

Which alternative would you recommend for Esme in light of your analysis?

$$Esme Reynolds is in her late $20$ s$.$ She is renting an apartment for $$1,700$ a month. After much thought, she's seriously considering buying a condominium for $$335,000.$ She intends to put $20$ percent down and expects that closing costs will amount to another $$11,000.$ A bank has agreed to lend her money at the fixed rate of $5$ percent on a $15-$year mortgage. Esme would have to pay an annual condominium owner's insurance premium of $$680$ and property taxes of $$3,300$ a year $($she$\text{'}$s now paying renter's insurance of $$550$ per year$).$ In addition, she estimates that annual maintenance expenses will be about $0\mathrm{.}5$ percent of the price of the condo $($which includes a $$30$ monthly fee to the property owners' association$).$ Esme's income puts her in the $24$ percent tax bracket $($she does not itemize her deductions on her tax returns$),$ and she earns an after$-$tax rate of return on her investments of around $4$ percent. Assume that the standard deduction for a single person is $$12,950.$

Given the information provided, use Worksheet $5\mathrm{.}2$ to evaluate and compare Esme's alternatives of remaining in the apartment or purchasing the condo. $($Note: Assume Esme does not have any security deposit.$)$ Round your answers to the nearest cent.

Annual ownership cost:

Annual rental cost:

$

$

Working with a friend who is a realtor, Esme has learned that condos like the one she's thinking of buying are appreciating in value at the rate of $3\mathrm{.}5$ percent a year and are expected to continue doing so$.$ Would such information affect the rent$-$or$-$buy decision made in Question $1?($yes$/$no$)$

$$

Describe any other factors that should be considered when making a rent$-$or$-$buy decision. Location must be considered. If the purchase unit $($Is$/$is not$)$ near public transportation, there may be additional transportation costs to consider.

$$ The length of time she plans to remain in this location and the cost of selling the condo must be considered. If she will stay in the location for $($less$/$more$)$than three years, renting will probably be the better alternative. If she will stay in the location for $($less$/$more$)-$Select$-$Y than three years, the appreciation will probably cover the cost of selling at a future date.

Which alternative would you recommend for Esme in light of your analysis? $($Buy the condo$/$ Rent an apartment$)$