Problem 9-1 Comparing Renting and Buying [LO9-1] Rental Costs Annual rent Insurance Security deposit Buying Costs Annual mortgage payments Property taxes Insurance, maintenance $ 7,380 145 650 Rental cost Buying cost Down payment, closing costs Growth in equity Estimated annual appreciation Assume an after-tax savings interest rate of 6 percent and a tax rate of 28 percent. a. Calculate the total rental cost and total buying cost. $9,800 ($ 9,575 is interest) 1,780 1,050 4,500 225 1,700 Total Cost b. Based on the cost criteria, would you recommend buying or renting? Buying Renting

Problem 9-1 Comparing Renting and Buying [LO9-1] Assume an after-tax savings interest rate of 6 percent and a tax rate of 28 percent. a. Calculate the total rental cost and total buying cost. b. Based on the cost criteria, would you recommend buying or renting? Buying Renting