Question

Viola has to relocate for her job. She finds a townhome with an option to rent or buy. The conditions of each are shown below. Rent: Move-in costs of $2,380 and monthly payment of $845. Buy: Move-in costs of $5,260 and monthly payment of $785. Viola moves frequently due to her job, but she thinks that she will stay in the area for 4 years. Therefore, she decided to buy. Choose the best evaluation of Viola’s decision. a. Since the costs would be the same over the 4 year period, she will have made a good decision if the property value does not decrease. b. She made a fairly good decision. Buying the townhome will be cheaper over the 4 year period as long as she doesn’t have major repairs to make. c. She made a poor decision if the property value does not increase. Renting the townhome would be cheaper over the 4 year period. d. There is not enough information given to determine which option is best. Please select the best answer from the choices provided A B C D

Answer 1

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Answer 2

The best evaluation of Viola’s decision is `She made a poor decision if the property value does not increase. Renting the townhome would be cheaper over the 4 year period`

Therefore, the correct answer is:c

Step-by-step explanation:

The best evaluation of Viola's decision can be determined by comparing the total costs of renting versus buying the townhome over the 4-year period:

Rent:

• Move-in costs: $2,380
• Monthly payment: $845
• Total cost over 4 years: (12 months/year) x $845/month = $10,140
• Total cost including move-in costs: $10,140 + $2,380 = $12,520

Buy:

• Move-in costs: $5,260
• Monthly payment: $785
• Total cost over 4 years: (12 months/year) x $785/month = $9,420
• Total cost including move-in costs: $9,420 + $5,260 = $14,680

Based on these calculations, the total cost of renting the townhome over 4 years would be $12,520, while the total cost of buying would be $14,680. Therefore, the correct answer is: c. She made a poor decision if the property value does not increase. Renting the townhome would be cheaper over the 4-year period.

Buying the townhome would result in higher costs compared to renting, even taking into account the move-in costs. However, it's important to note that the evaluation of Viola's decision also depends on other factors such as the potential increase or decrease in property value, personal preferences, stability of the housing market, and future plans.

Therefore, the correct answer is:c