Problem 9-1 Comparing Renting and Buying [LO9-1]
Rental Costs
Annual rent $ 7,670
Insurance 199
Security deposit 1,190
Buying Costs
Annual mortgage payments $ 10,720 ($ 9,631 is interest)
Property taxes 2,140
Insurance, maintenance 1,230
Down payment, closing costs 4,500
Growth in equity 1,089
Estimated annual appreciation 2,300
Assume an after-tax savings interest rate of 5 percent and a tax rate of 28 percent.

Calculate the total rental cost and total buying cost.