Ralph Harder has been transferred to Regina for five years. He has found an attractive house that he can buy for $180,000 or rent for $1000 per month, payable at the beginning of each month. He estimates that the resale value of the house in five years will be $200,000 net of the selling commission. If he buys the house, the average (month-end) costs for repairs, maintenance, and property taxes will be $300. Should Mr. Harder rent or buy the house if mortgage rates are:
a) 7% compounded monthly?
b) 6% compounded monthly?

Question

Ralph Harder has been transferred to Regina for five years. He has found an attractive house that he can buy for $180,000 or rent for $1000 per month, payable at the beginning of each month. He estimates that the resale value of the house in five years will be $200,000 net of the selling commission. If he buys the house, the average (month-end) costs for repairs, maintenance, and property taxes will be $300. Should Mr. Harder rent or buy the house if mortgage rates are:
a) 7% compounded monthly? 
b) 6% compounded monthly?

Quizplus · Accepted Answer

The Answer of Ralph Harder has been transferred to Regina for five years. He has found an attractive house that he can buy for $180,000 or rent for $1000 per month, payable at the beginning of each month. He estimates that the resale value of the house in five years will be $200,000 net of the selling commission. If he buys the house, the average (month-end) costs for repairs, maintenance, and property taxes will be $300. Should Mr. Harder rent or buy the house if mortgage rates are:
a) 7% compounded monthly? 
b) 6% compounded monthly?

Ralph Harder Has Been Transferred to Regina for Five Years