You are planning to live in the city of Houston, Texas for 5 years. You are deciding to rent or to buy a house for this 5-year period.

Rent: Monthly rental cost will be $1,200 paid at the end of each month.

Buy: The purchase price of the house you intend to buy is $220,000. You will pay cash. You believe you can sell the house for $250,000 at the end of 5 years.

Which option (buy or rent) is better, and by how much? The interest rate is 5.76% COMPOUNDED MONTHLY. Ignore income taxes. Also ignore any other factors not specifically mentioned in the data above.

Rent is better. The difference is $30,000.

Buy is better. The difference is $24,020.

Rent is better. The difference is $24,020.

Buy is better. The difference is $30,000.