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

Rental Costs			Buying Costs
Annual rent	$	7,530	Annual mortgage payments	$	10,100	(9,650 is interest)
Insurance	$	160	Property taxes	$	1,840
Security deposit	$	725	Down payment/closing costs	$	4,800
			Growth in equity	$	450
			Insurance/maintenance	$	1,200
			Estimated annual appreciation	$	1,850

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. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)

b. Would you recommend buying or renting?

multiple choice

• Buying

• Renting