Question

Based on the following data, would you recommend buying or renting? Rental Costs Buying Costs Annual rent $ 7,930 Annual mortgage payments $ 10,750 (9,850 is interest) Insurance $ 200 Property taxes $ 2,000 Security deposit $ 1,200 Down payment/closing costs $ 5,600 Growth in equity $ 900 Insurance/maintenance $ 1,600 Estimated annual appreciation $ 2,250 Assume an after-tax savings interest rate of 5 percent and a tax rate of 26 percent. Assume this individual has other tax deductions that exceed the standard deduction amount.a. Calculate total rental cost and total buying cost.b. Would you recommend buying or renting?

Answer 1

Total Rental Costs $7,564

Total Buying Costs $7,796

Based on the calculations, it is advisable to take the property on rent as it results in lesser cost.

Answer for Part B) is Renting

Step-by-step explanation: