a. Calculate the total rental cost and total buying cost. Rental cost Buying cost Total Cost b. Based on the cost criteria, would you recommend buying or renting? O Buying
a. Calculate the total rental cost and total buying cost. Rental cost Buying cost Total Cost b. Based on the cost criteria, would you recommend buying or renting? O Buying
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
pm.3

Transcribed Image Text:Rental Costs
Annual rent
$ 7,380
Insurance
145
Security deposit
650
Buying Costs
Annual mortgage payments
Property taxes
Insurance, maintenance
Down payment, closing costs
Growth in equity
Estimated annual appreciation
$ 9,800 ($ 9,575 is interest)
1,780
1,050
4,500
225
1,700
Assume an after-tax savings interest rate of 6 percent and a tax rate of 28 percent.
a. Calculate the total rental cost and total buying cost.
Rental cost
Buying cost
Total Cost
b. Based on the cost criteria, would you recommend buying or renting?
Buying
Renting
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