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Does renting or purchasing makes t

Does renting or purchasing makes t

FINANCIAL ACCOUNTING
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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Purchase Home Length of Time Purchase Home Rent Home 5 years 10 years 15 years Rent Home $78,559.20 $54,900.00 $127,118.40 $115,200.00 $175,677.60 $180,900.00 • Total 5-year cost: $30,000.00 +5 x 12 x $809.32 $78,559.20 • Total 10-year cost: $30,000.00 + 10 × 12 × $809.32 = $127,118.40 • Total 15-year cost: $30,000.00 + 15 × 12 × $809.32= $175,677.60 • Total 5-year cost: (4 × 12 × $900) + (1 × 12 × $975) = $54,900 • Total 10-year cost: (4 × 12 × $900) + (4 × 12 × $975) + (2 × 12 × $1050) = $115,200 • Total 15-year cost: (4 × 12 × $900) + (4 × 12 × $975) + (4 × 12 × $1050) + (3 × 12 × $1125) = $180,1900 Recall the pros and cons of buying a house and which conditions make it better to to purchase a home. Also, think abc the pros and of renting a house and which conditions make it better to rent. Use this information along with the total costs you found to answer the following prompts. Make sure to write your answer in complete sentences. • Does renting or purchasing makes the most sense for the Bainters if they live in the house 1 year? 5 years? 10 years? 15 years? • For each interval, explain why you think the Bainters should rent or purchase a home. Use mathematical evidence to support your conclusions.
Transcribed Image Text:Purchase Home Length of Time Purchase Home Rent Home 5 years 10 years 15 years Rent Home $78,559.20 $54,900.00 $127,118.40 $115,200.00 $175,677.60 $180,900.00 • Total 5-year cost: $30,000.00 +5 x 12 x $809.32 $78,559.20 • Total 10-year cost: $30,000.00 + 10 × 12 × $809.32 = $127,118.40 • Total 15-year cost: $30,000.00 + 15 × 12 × $809.32= $175,677.60 • Total 5-year cost: (4 × 12 × $900) + (1 × 12 × $975) = $54,900 • Total 10-year cost: (4 × 12 × $900) + (4 × 12 × $975) + (2 × 12 × $1050) = $115,200 • Total 15-year cost: (4 × 12 × $900) + (4 × 12 × $975) + (4 × 12 × $1050) + (3 × 12 × $1125) = $180,1900 Recall the pros and cons of buying a house and which conditions make it better to to purchase a home. Also, think abc the pros and of renting a house and which conditions make it better to rent. Use this information along with the total costs you found to answer the following prompts. Make sure to write your answer in complete sentences. • Does renting or purchasing makes the most sense for the Bainters if they live in the house 1 year? 5 years? 10 years? 15 years? • For each interval, explain why you think the Bainters should rent or purchase a home. Use mathematical evidence to support your conclusions.
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