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Use Worksheet 5 2 Rosa Ramirez is currently renting an apartment for $725 per month and paying $275 annually for renters insurance She just found a small townhouse she can buy for

Use Worksheet 5.2. Rosa Ramirez is currently renting an apartment for $725 per month and paying $275 annually for renter’s insurance. She just found a small townhouse she can buy for $185,000. She has enough cash for a $10,000 down payment and $4,000 in closing costs. Her bank is offering 30-year mortgages at 6% per year. Rosa estimated the following costs as a percentage of the home’s price: property taxes, 2.5%; homeowner’s insurance, 0.5%; and maintenance, 0.7%. She is in the 25% tax bracket and has an after-tax rate of return on invested funds of 4%. Using Worksheet 5.2, calculate the cost of each alternative and recommend the less costly option—rent or buy—for Rosa.

May 17 2020 View more View Less

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