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Based on the following data would you recommend buying or renting Rental Costs Buying Costs Annual rent

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

 

   Rental  Costs                                           Buying Costs          
  Annual rent $ 7,630      Annual mortgage payments $ 10,300    (9,700 is interest)
  Insurance $ 170      Property taxes $ 1,880     
  Security deposit $ 900      Down payment/closing costs $ 5,000     
          Growth in equity $ 600     
         Insurance/maintenance $ 1,300     
        Estimated annual appreciation $ 1,950     

 

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?
   
 
  Renting
  Buying

Apr 14 2020 View more View Less

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