Problem 9-1 Comparing Renting and Buying [LO9-2] Rental Costs Buying Costs Annual rent $ 8,270 Annual mortgage payments $ 10,320 ($9,628 is interest) Insurance 205 Property taxes 2,480 Security deposit 1,540 Insurance/maintenance 1,910 Down payment/closing costs 4,500 Growth in equity 692 Estimated annual appreciation 2,500 Assume an after-tax savings interest rate of 5 percent and a tax rate of 28 percent.

(a) Calculate the total rental cost and total buying cost. (Round your intermediate calculations and final answers to the nearest whole number.)

rental cost:

buying cost:

(b) Based on the cost criteria, would you recommend buying or renting?

Renting or Buying