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Calculate total rental cost and total buying cost

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

Rental  Costs                                          Buying Costs            Annual rent$7,980    Annual mortgage payments$10,700  (9,875 is interest)  Insurance$205    Property taxes$2,020     Security deposit$1,250    Down payment/closing costs$5,400          Growth in equity$825         Insurance/maintenance$1,650        Estimated annual appreciation$2,300   

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.

 b. Would you recommend buying or renting?

Reference no: EM131574349

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