Based on the following data, would you recommend buying or renting?

Rental Costs Buying Costs Annual rent $ 8,180 Annual mortgage payments $ 10,500 (9,975 is interest) Insurance $ 225 Property taxes $ 2,100 Security deposit $ 1,050 Down payment/closing costs $ 5,200 Growth in equity $ 525 Insurance/maintenance $ 1,850 Estimated annual appreciation $ 2,500

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.)

Rent Cost =

Buying Cost =

b. Would you recommend buying or renting?

• Renting
• Buying

b. Would you recommend buying or renting?

• Renting
• Buying