Question

Carole Finney rents an apartment for $650 a month and pays$120 for insurance and $820 for utilities yearly. She can buy a home with about the same space for$52,000. If she buys the home, she must withdraw $10,400 from her savings account and lose$624 interest. Her other home ownership expenses are estimated to be $9,300. She also estimates that owning a home will save her$1,428 in income taxes.

Answer 1

Carole Finney's monthly expenses will decrease from $1,790 to $893.33 if she buys the home, resulting in a monthly savings of approximately $896.67.

Step-by-step explanation:

Carole Finney currently pays $650 a month for rent, $120 for insurance per month, and $820 for utilities annually. If she buys a home, her other expenses would include withdrawing $10,400 from savings and losing $624 in interest, as well as $9,300 in estimated home ownership expenses. However, she estimates that owning a home will save her $1,428 in income taxes.

To calculate the monthly cost of owning a home, we need to divide the sum of the annual expenses by 12. In this case, the annual expenses amount to $10,720 ($820 + $9,300 + $624), and dividing by 12 gives us a monthly cost of $893.33.

Therefore, if Carole buys the home, her monthly expenses will decrease from $1,790 ($650 + $120 + $1,020) to $893.33, resulting in a monthly savings of approximately $896.67 ($1,790 - $893.33).