You are planning to live in the city of Houston, Texas for 7 years. You are deciding to rent or to buy a house for this 7-year period Rent: Monthly rental cost will be $2,500 paid at the end of each month. Buy: The purchase price of the house you intend to buy is $250,000. You will pay cash. You believe you can sell the house for $325,000 at the end of 7 years. Which option (buy or rent) is better, and by how much? The interest rate is 12% COMPOUNDED MONTHLY. Ignore income taxes. Also ignore any other factors not specifically mentioned in the data above.

Buy is better. The difference is $32,514. Buy is better. The difference is $58,524. Buy is better. The difference is $311,406. Rent is better. The difference is $32,514. Rent is better. The difference is $58,524. Rent is better. The difference is $311,406.