Based on the following data, would you recommend buying or renting? Rental Costs Buying Costs Annual rent $ 7,780 Annual mortgage payments $ 10,600 (9,775 is interest) Insurance $ 185 Property taxes $ 1,940 Security deposit $ 850 Down payment/closing costs $ 5,300 Growth in equity $ 825 Insurance/maintenance $ 1,450 Estimated annual appreciation $ 2,100 Assume an after-tax savings interest rate of 6 percent and a tax rate of 28 percent. Assume this individual has other tax deductions that exceed the standard deduction amount. a. Calculate total rental cost and total buying cost. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)

Rental Cost ____

Buying Cost _____

b. Would you recommend buying or renting?

Buying

Renting