Your friend Mary lives in Papakura in her own apartment that has been fully paid off. Mary works full-time in Auckland city central. She takes public transport (bus- train-bus connections) and spends over one and a half hours each way every weekday and in some of the weekends. For this reason, Mary is thinking of moving to the city central area. That will allow her to avoid this time-consuming daily travel. She is considering the options of buying versus renting. If Mary buys a small apartment in the city, it will cost her around $680,000. The total estimated legal fees are $2,000. She will have to pay the periodic Body Corp fees of $2,800 per year and City Council Rates of $2,900 per year. Given that she can afford a 20% deposit for down payment, she will be taking up a mortgage loan on the remaining amount at 6% per annum from Kiwibank. She would opt for monthly repayment for 30 years. Alternatively, if Mary rents an apartment in the city, the weekly rent will be $650. She will have to sign a one-year contract and subject herself to the periodic inspection on the apartment conducted every three months by the rental agent. She is unsure how comfortable she will be with this rental commitment. In either case, if Mary moves to the city, she will need to also decide whether to sell her apartment in Papakura or to rent it out. The estimated selling price is $625,000, the agent fees $15,000, and legal fees $2,000. If she rents out her Papakura apartment, the estimated weekly rent is $450. She intends to get a rental agent to manage her property. This rental agent charges 8% on management fees. If she keeps this apartment, she will have to continue to pay the Body Corp fees of $2500 per annum and Council rate of $2300 per annum. Mary knows that you are taking a Personal Finance paper. So she has approached you for advice. She is hoping that your analysis and advice can help her make a wise financial decision. Your tasks: 1. 2. Buy or rent in the city? Apply your time value of money skills to compare the pros and cons of buying versus renting. In the financial analysis of buying versus renting, include all relevant costs in each option. (You can make some assumptions where necessary.) 3. Sell or rent out the Papakura apartment? What are the pros and cons for each option and how will this decision affect Part 1? (Ignore insurance. You can make some assumptions where necessary.) Based on the above financial analysis, provide Mary with your financial advice. Clearly explain your answers and calculations. 4. Prepare a short presentation (5-8 minutes) to answer the above questions.