Consider the buy vs. rent Excel spreadsheet provided to below.

a. According to the assumptions made in that spreadsheet, should the average individual buy or rent? Briefly explain.

b. Using Goal Seek alter the buy vs. rent Excel spreadsheet so that it shows the minimum rate of price appreciation the homeowner must receive in order to be better off buying than renting.

Highlight in yellow the cell that includes this price appreciation rate.

nput Variables Inflation expectation 30% 2.00% Down payment $300,000 Purchase price Loan amount $210,000 $2,200 Initial monthly rent Interest rate (Fixed) 00%. Rental growth rate $3,000 2.00% Mortgage initiation fee Property appreciation 2.00% Loan maturity (years) 30 $4,500 $1,002.57 Mortgage Payment nsurance $3,000 Holding period (years) Maintenance Expense growth 2.00% Selling expenses 6.50% Marginal tax rate 25.00% 8.50% Invetments opportunity $5,250 Property tax Option 1: Buy the house Year Out flows $93,000 Down payment Origination $7,500 $7,650 $7,803 $7,959 $8,118 Insurance & Maintenance $5,250 $5,355 $5,462 $5,571 $5,683 Property tax $12,031 $12,031 $12,031 $12,031 $12,031 Mortgage payments P $93,000 $24,781 $25,036 $25,296 P $25,561 $25,832 Total in flow $3,372 $3,358 $3,344 $0 $3,396 $3,384 Tax benefits overall out of pocket" $93,000 $21,385 $21,652 $21,924 $22,203 $22,488 Other $8,333 $8,182 $8,025 $7,862 $7,692 $4,006 $4,169 $4,339 Interest payment $3,698 $3,849 Principal payments $318,362 $324,730 $331,224 $300,000 $306,000 $312,120 House value Total equity $90,000 $99,698 $109,667 $119,915 $130,451 $141,284 Cash at time sold $119,755