M-a-k-e- -a- -d-e-t-a-i-l-e-d- -s-o-l-u-t-i-o-n- -a-n-d- -e-x-p-l-a-n-a-t-i-o-n- -o-f- -h-o-w- -e-v-e-r-y- -o-f- -t-h-a-t- -a-m-o-u-n-t- -g-o-t- A. COST OF RENTING1. Annual rental costs(12 x monthly rental rate of 850)RENT - OR - BUY ANALYSIS2. Renter's insurance3. Opportunity cost of security deposit 1,000 x after-tax savings rate0.040Total costs of renting (line A.1 + line A.2 + line A.3)B. COST OF BUYING1. Annual mortgages payments (Terms: 120,000.00, 360 months 6%)(12 x monthly mortgage payment of 719)2.Property taxes(2.0% of the price of the home)3. Homeowner's insurance(0.5% of the price the of home)4. Maintenance(0.8% of the price of the home)5. After-tax cost of interest on down payment and closing costs(34,500 x 4.0% after-tax rate of return)6. Total costs (sum of lines B.1 through B.5Less:7. Principal reduction in loan balance (see note below)8. Tax savings due to interest deduction(Interest portion of mortgage payments (7,200 x tax rate 25%9. Tax savings due to property tax deductions(Line 8.2 x tax rate of 25%)10. Total deductions (sum of lines B.7 through B.9)11. Annual after-tax cost of homeownership(Line B.6-line B.1012. Estimated annual appreciation in the value of the home(2% of the price of the home)Total cost of buying (line 8.11-line B.12)10,200600408,6343,0007501,2001,3801,4341,80075010,84014,9643,98410,9803,0007,980

In rent or buy home decision we calculate the cost benefit analysis of both and…

Answered: COST OF RENTING

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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How many three-letter sequences are possible that use the letters a, p, j, e, z at most once each? ----------------------------------sequences
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D.e.d.u.c.t.i.o.n.s. .f.r.o.m. .G.r.o.s.s. .I.n.c.o.m.e. N.o.t.e.:. .I.n.c.o.m.e. .t.a.x.a.t.i.o.n. .-. .P.h.i.l.i.p.p.i.n.e.s. .b.a.s.e.d D.e.f.i.n.e. .".b.u.s.i.n.e.s..s ..e.x.p.e.n.s.e.s...".?. .D.i.f.f.e.r.e.n.t.i.a.t..e. .t.he. ..a.l.l.o.w.a.b.l.e. O.S.D. .f.o.r. .i.n.d.i.v.i.d.u.a.l. .f.r.o..m .t.h.a.t. .o.f. .t.h.e. .c.o.r.p.o.r.a.t.i.o.n. E.n.u.m.e.r.a.t.e. .t.h.e. .t.a.x.p.a.y.e.r.s. .t.h.a.t. .a.r.e. .a.l.l.o.w.e.d .t.o. .d.e.d.u.c.t. .O.S.D. C.a.n. .a. .h..u.s.b.a.n.d. .c.l.a..i.m .O.S.D. ..w.h.i.le. .t.h.e. .w.i.f.e.. .cl.a.i.m.. i.t.e.m.i.z.e.d. .d.e.d..u.c.t.i.o.n.s. .(.v.i.s.e.. .v.e.r.s.a.). .i.n. .t.h.e.i.r.. c.o.n.s.o.l.i.d.a.t..ed. .I.T.R.?.. .J.u.s.t.i.f.y. .y.o.u.r. .a.n.s..w.e.r. D.e.f.i.n.e. ."..i.t.e.m.i.z.e.d. .d.e.d.u.c.t..i.o.n.s..".?.. E.n.u.m.e.r.a.t.e. .t.h.e. .i.n.c.o.m.e.s. .t.h.a.t. .a.r.e. .g.r.a.n.t.e.d. .w.i.t.h. .a.l.l.o.w.a.b.l.e. .i.t.e.m.i.z.e.d. .d.e.d.u.c.t.i.o.n.s. W.h.a.t. .i.s. .a. .".g.e.n.e.r.a.l. .b.u.s.i.n.e.s.s. .e.x.p.e.n.s.e.s.".?.…
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