Jurgen Wiebe has been transferred to Winnipeg for five years. He has found an attractive house that he can buy for $160,000 or rent for $1150 per month, payable at the beginning of each month. He estimates that the resale value of the house in five years will be $175,000 net of the selling commission. If he buys the house, the average (end-of-month) costs for repairs, maintenance, and property taxes will be $400. Should Mr. Wiebe rent or buy the house if the interest rate on five-year mortgage loans is 6.6% compounded monthly?

Question

Quizplus · Accepted Answer

The Answer of Jurgen Wiebe has been transferred to Winnipeg for five years. He has found an attractive house that he can buy for $160,000 or rent for $1150 per month, payable at the beginning of each month. He estimates that the resale value of the house in five years will be $175,000 net of the selling commission. If he buys the house, the average (end-of-month) costs for repairs, maintenance, and property taxes will be $400. Should Mr. Wiebe rent or buy the house if the interest rate on five-year mortgage loans is 6.6% compounded monthly?

Jurgen Wiebe Has Been Transferred to Winnipeg for Five Years