Based on the following data, would you recommend buying or renting? rental costs- annual costs- annual rent $7,380, insurance $145. security deposit $ 650. - buying costs- annual mortgage payments $9,800 ($9,575 is interest ), property taxes $ 1,780, down payment / closing costs $4,500, growth in equity $225, insurance / maintenance $1,050, estimated annual appreciation $ 1,700. assume an after tax savings interest rate of 6 percent & a tax rate of 28 percent.

net annual cost of renting is less than that of purchase

so we can say it is beneficial to rent the property

Explanation:

we know that that Costs Associated with Buying a Property

Annual Mortgage Payment  = $ 9800 ( out of $9575 is interest payment)

Property Taxes = $ 1780

Down Payment  = $ 4500

Insurance / Maintenance = $1050

Total Costs = 17,130

minus here  Tax Savings on Mortgage Interest = $2,681

that is  ( 9575 × 28%)

Tax Savings on Property Taxes = $498.40 i.e (28% of 1780)

Growth in Equity = $225.00

Estimated Annual appreciation= $ 1,700.00

Net Annual cost on purchase= $ 12,025.60

Costs Associated with Renting a Property   Annual Rent = $ 7,380.00

Security Deposit  = $   650.00

Insurance = $   145.00

Total Costs  = $ 8,175.00

Less   Interest receivable on   Down payment amt invested = $ 270.00    

i.e (4500  6% after tax rate)

Net Annual Cost on Renting = $7,905.00

so that here net annual cost of renting is less than that of purchase

so we can say it is beneficial to rent the property

these are the four factors that influence enterpreneurship development

1. economic development

2. culture

3.technological development

4. education