Question

Based on the following data, would you recommend buying or renting?

Rental  Costs                                           Buying Costs
Annual rent	$	8,230	Annual mortgage payments	$	10,450	(10,000 is interest)
Insurance	$	230	Property taxes	$	2,120
Security deposit	$	1,500	Down payment/closing costs	$	5,300
			Growth in equity	$	450
			Insurance/maintenance	$	1,900
			Estimated annual appreciation	$	2,550

Assume an after-tax savings interest rate of 7 percent and a tax rate of 32 percent. Assume this individual has other tax deductions that exceed the standard deduction amount.

a.	Calculate total rental cost and total buying cost. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)

Rental cost	$
Buying cost	$

b.

Would you recommend buying or renting?

	Buying
	Renting

Answer 1