Rental Costs Buying Costs Annual mortgage payments Property taxes Insurance/maintenance Annual rent $8,270 $10,320 ($9,628 is interest) Insurance 205 2,480 Security deposit 1,540 1,910 4,500 Down payment/closing costs Growth in equity Estimated annual appreciation 692 2,500 Assume an after-tax savings interest rate of 5 percent and a tax rate of 28 percent. (a) Calculate the total rental cost and total buying cost. (Round your intermediate calculations and final answers to the nearest whole number.) Total Cost Rental cost Buying cost (b) Based on the cost criteria, would you recommend buying or renting? O Renting O Buying

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Rental Costs
Buying Costs
Annual mortgage payments
Property taxes
Insurance/maintenance
$8,270
205
$10,320 ($9,628 is interest)
2,480
1,910
4,500
Annual rent
Insurance
Security deposit
1,540
Down payment/closing costs
Growth in equity
Estimated annual appreciation
692
2,500
Assume an after-tax savings interest rate of 5 percent and a tax rate of 28 percent.
(a) Calculate the total rental cost and total buying cost. (Round your intermediate calculations and final answers to the nearest
whole number.)
Total Cost
Rental cost
Buying cost
(b) Based on the cost criteria, would you recommend buying or renting?
Renting
Buying
Transcribed Image Text:Rental Costs Buying Costs Annual mortgage payments Property taxes Insurance/maintenance $8,270 205 $10,320 ($9,628 is interest) 2,480 1,910 4,500 Annual rent Insurance Security deposit 1,540 Down payment/closing costs Growth in equity Estimated annual appreciation 692 2,500 Assume an after-tax savings interest rate of 5 percent and a tax rate of 28 percent. (a) Calculate the total rental cost and total buying cost. (Round your intermediate calculations and final answers to the nearest whole number.) Total Cost Rental cost Buying cost (b) Based on the cost criteria, would you recommend buying or renting? Renting Buying
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