Ralph Harder has been transferred to Regina for five years. He has found an attractive house that
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Ralph Harder has been transferred to Regina for five years. He has found an attractive house that he can buy for $180,000 or rent for $1000 per month, payable at the beginning of each month. He estimates that the resale value of the house in five years will be $200,000 net of the selling commission. If he buys the house, the average (month-end) costs for repairs, maintenance, insurance, and property taxes will be $300. Should Mr. Harder rent or buy the house if mortgage rates are: a. 7% compounded monthly? b. 6% compounded monthly?
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The alternative having the lower present value of costs should be chosen The ...View the full answer
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