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Question: Rental Costs Buying Costs Annual rent $ 7,380 Annu...

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.) Rental cost $ Buying cost $

b.Would you recommend buying or renting?RentingBuying

Calculate the Social Security and Medicare deductions for the following employee (assume a tax rate of 6.2% on $106,800 for Social Security and 1.45% for Medicare)(Omit the "$" sign in your response.):

EmployeeCumulative earning

before this pay period

Pay amount

this period

Social

SecurityMedicareChin$99,300$8,000$$

1. Weighted Average Accumulated Applicable Avoidable Exnsddmtes W M $4,500,000 .10 $450,000 m .1 1* m M m = Avoidable Interest *Comoutation of weighted average interest rate: _ELi.I:tGinaL .mlstest 12% te nvear bonds $5,000,000 $600,000 9% 13year note W _225.l] M m Weighted average interest rate = $025,000 + $?,500,000 = 11%. 2. Actual interest cost during 2012: Construction note, $4,500,000 X .10 $ 450,000 12% tenyear bonds, $5,000,000 X .12 500,000 9% threeyear note, $2,500,000 X .09 _22_5_,_l10_0 W The interest cost to be capitalized is $195,000 {the lesser of the $T25,000 avoidable interest and the $1 ,2?5,000 actual interest}