Time Value of Money: Buy versus Rent
Based on the case study. Sean Cleary and Stephen Foerster, Ivey Publications, August 11, 2014
Question
				(4) Principal Outstanding
		Initially		After 2 years	After 5 Years	After 10 Years
	Purchase Price	$600,000.00
	Legal fees	$2,000.00
	Deed transfer tax (@3%)	$18,000.00
	Down Payment (20%)	$120,000.00
	Total Due at Closing	$140,000.00
	Amortization Period (Years)	25		23	20	15
	Payment Frequency	12		12	12	12
	Number of Payments remaining	300		276	240	180
	Mortgage Amount	480000	Princ OS	$456,609.29	$417,858.79	$342,109.01

	Quoted Rate	4%
	Eff. Monthly rate	0.00330589
(1)	MonthlyMortgage Payments	$2,524.90
	Monthly Condo Fees	1055
	Monthly Taxes	300
	Monthly Repairs etc.	50
	Total Monthly Payments if Buy	$3,929.90
	Monthly Rent	3000
	Net Additional Payments	$929.90
(2)	Monthly Opportunity Costs of
	240000 (Closing Costs + Down Pmt)	$462.82
(3)	TOTAL Additional Monthly CF "costs"	$1,392.72

Read the HBR case study Time Value of Money: The Buy Versus Rent Decision and calculate the best route for the graduates housing situation, developing your understanding of time value of money (TVM) concepts and calculations. Describe your assumptions, methodology, and results in your discussion narrative,