Rent vs. buy home. Use Worksheet 5.2. Denise Green is currently renting an apartment for 725 per month and paying $275 annually for renter’s insurance. She just found a small townhouse that she can...

Rent vs. buy home. Use Worksheet 5.2. Denise Green is currently renting an apartment for
725 per month and paying $275 annually for renter’s insurance. She just found a small townhouse that she can buy for185,000. She has enough cash for a
10,000 down payment and
4,000 in closing costs. Her bank is offering 30-year mortgages at 6 percent per year. Denise estimated the following costs as a percentage of the home’s price: property taxes, 2.5 percent; homeowner’s insurance, 0.5 percent; and maintenance, 0.7 percent. She is in the 25 percent tax bracket and has an after-tax rate of return on invested funds of 4 percent. Using Worksheet 5.2, calculate the cost of each alternative and recommend the less costly option—rent or buy—for Denise.