Question

Review the rental and purchase property information to answer the question: Rental Property: $1,350 per month. Move-in costs: first month, last month, security deposit equal to 55% of one month's rent. Purchase Property: $195,450 purchase price. Move-in costs: down payment equal to 18% of the purchase price, closing costs equal to 2.1% of the purchase price. Calculate the difference in total move-in costs between the two properties.

Option 1: $31,497.35
Option 2: $35,842.95
Option 3: $39,285.45
Option 4: $41,976.55

Answer 1

To calculate the difference in total move-in costs between the rental and purchase properties, we need to calculate the move-in costs for each property and then find the difference. The move-in costs for the rental property include the first month's rent, last month's rent, and the security deposit. The move-in costs for the purchase property include the down payment and closing costs. The difference in total move-in costs between the two properties is $35,839.95.

Step-by-step explanation:

To calculate the difference in total move-in costs between the rental and purchase properties, we need to calculate the move-in costs for each property and then find the difference. Let's start with the rental property:

The move-in costs for the rental property include the first month's rent, last month's rent, and the security deposit. The security deposit is equal to 55% of one month's rent.

So, the security deposit is 55% of $1,350, which is $742.50.

Therefore, the total move-in costs for the rental property are:

1. First month's rent: $1,350
2. Last month's rent: $1,350
3. Security deposit: $742.50

Total: $1,350 + $1,350 + $742.50 = $3,442.50

Now, let's calculate the move-in costs for the purchase property:

The move-in costs for the purchase property include the down payment and closing costs. The down payment is equal to 18% of the purchase price, which is $195,450.

So, the down payment is 18% of $195,450, which is $35,181.

The closing costs are equal to 2.1% of the purchase price, which is $195,450.

So, the closing costs are 2.1% of $195,450, which is $4,101.45.

Therefore, the total move-in costs for the purchase property are:

1. Down payment: $35,181
2. Closing costs: $4,101.45

Total: $35,181 + $4,101.45 = $39,282.45

Finally, to calculate the difference in total move-in costs, we subtract the total move-in costs for the rental property from the total move-in costs for the purchase property: $39,282.45 - $3,442.50 = $35,839.95.

Therefore, the difference in total move-in costs between the two properties is $35,839.95.