A couple has saved their money to buy a house paying cash, but they are trying to decide whether or not to buy the house or rent and take the money saved and invest it. The house costs $192,500. If they buy the house, they plan to sell it in 10 years hoping the value would appreciate. In 10 years, they expect the total rent to be $126,000 leaving $66,500 to invest. The investment account pays 4.25% compounded quarterly. The house would expect to appreciate at 5.5% per year. Which option earns the couple the most money in 10 years, the amount of the appreciation of the house or the amount of interest earned on the money that is invested?

Answer rating: 100% (QA)

To compare the amount earned from the appreciation of the house with the amount earned from the inte... View the full answer