Pierre is deciding whether he should rent or buy a house. Assuming that renting an apartment will cost of him $1,500 per month and the mortgage on a house is $3,500 per month. If he rents, he considers investing the difference between monthly rental cost and mortgage cost in a Balanced Fund earning 8% per year. If the house he purchases in Oshawa, Ontario costs about $1,000,000 and has a downpayment of $200,000, and he intends on paying off the mortgage after 25 years. If he decides to sell the house in 25 years and the house appreciates at a rate of 5% per year:

Question 1 o What would be the better outcome, renting or buying and by how much? (Show your work and include all financial calculators) o Assume that he can also invest the downpayment and the monthly contribution at a rate of 8% over a 25-year period. o Calculate the investment value of renting versus home ownership.

Question 2 o Based on your answer in Question 1, what factors would make you change your mind and choose the other. o List a minimum of 3 reasons or factors and elaborate as to why