Stephanie $is$ considering moving $to$ one $of$ the locations: Location $Aor$ Location $B.$ She has $$150,000$ cash $in$ han$\frac{d}{d}$own payment and $is$ approved $to$ loan $upto$ $$400,000ata6\%$ mortgage interest rate. She expects the home sales price $in$ Location A will $be$ $$210,000$ and the price $in$ Location $B$ will $be$ $$545,000in$ the next year.

Location A Location $B$

Sales price $$200,000$ $$500,000$

Monthly rent $$1,400$ $$3,000$

Property tax rate $3\%5\%$

$*For$ simplification, $we$ assume individuals sell their property $in$ the next year $if$ they choose $to$ buy now. Ignore tax deductions, inflation, psychological cost$\frac{s}{b}$enefits, closing fees, and other miscellaneous costs when calculating the cost $of$ owning. $We$ also assume the assessed value $in$ property tax $is$ the same $as$ the transaction price $(=$home sales price$).$

$*Use$ the $1\%$ rule $of$ thumb $in$ estimating the annual maintenance cost and $10\%$ annual stock market return $in$ estimating the expected capital gain $in$ the alternative investment.What $is$ the annual cost $of$ owning for Stephanie $in$ location $A?$ The cost $of$ owning should include the expected value appreciation, mortgage interest, property tax, and maintenance costs. $(Note$: the cost could $be$ either positive $or$ negative. When the cost $is$ negative, $it$ means Stephanie will make profits.$)$