Ask Question, Ask an Expert


Ask Accounting Basics Expert

Greg Allen, age 25, is considering buying his first house, but is uncertain if it is a better decision than renting an apartment. He could rent a 2,000 square foot, 3 bedroom apartment with a carport for $940 per month. Alternatively he could buy a home closer to his work for $175,000. The home is a 3 bedroom, 2-car garage property with similar square footage to the apartment. By paying $2,000 in closing costs, putting $22,000 down, and taking out a $153,000 mortgage, his payment would be $687 (principal and interest at 4.5% for 30 years) plus $200 per month real estate taxes, $100 per month home insurance, and $25 per month private mortgage insurance. He thinks he would stay in the home for 5 years. He expects his rent to increase and home to appreciate at 2% per year over the 5 years. Investments will return 7% before tax over that period. When he sells the home, he will pay a realtor 6% of the sale price and $2,000 in closing costs. Please prepare an analysis of whether he should rent or buy, considering his cash flow and tax consequences at a federal marginal rate of 25% and a state tax rate of 6% using an Excel spread sheet. Greg itemizes whether he buys the house or not. Assume he buys the home on January 1, 2013. Prepare spreadsheets and a less-than-200-word memo describeing your conclusion whether to buy or rent.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M945920

Have any Question? 

Related Questions in Accounting Basics

Assignment- fraud in the accounting information systemfor

Assignment- Fraud in the Accounting Information System For this assignment, research the Internet or Strayer databases to locate a firm that was involved in a fraud and / or embezzlement case. Explain how the firm's acco ...

Discussionpart 1please respond the following question no

DISCUSSION PART 1 PLEASE RESPOND THE FOLLOWING QUESTION NO LESS THEN 350 WORDS (ORIGINAL WORK, NO PLAGIARISM, 1 Reference "Financial Statement Analysis" Please respond to the following: • Evaluate at least factors that m ...

Accounting questioncase scenario japanese gaap vs chinese

Accounting Question: Case scenario: Japanese GAAP vs. Chinese Convergence Research and compare the convergence of China's financial reporting standards with U.S. GAAP or IAS GAAP since 1999 and respond to the following q ...

Question part one what are the differences between a direct

QUESTION PART ONE: What are the differences between a direct cost and an indirect cost? Which is the more difficult cost to track? Why? How do indirect costs affect the cost of a product? Should indirect costs be include ...

1 the ultimate responsibility for the formulation of

1) The ultimate responsibility for the formulation of financial reporting rules in the US rests with: a. Congress b. Financial accounting standards board c. IRS d. Securities & exchange commission 2) In countries where t ...

Practice questionsthink of a business that you would like

Practice questions: Think of a business that you would like to start. Draw up a list of all the expenses the business would incur and indicate the source of the information you would need to calculate the figures for the ...

Accounting for managers assignment- question 1 -bonza

Accounting for Managers Assignment- Question 1 - Bonza Handtools Ltd. manufactures a popular power drill suitable for the home renovator. Financial and other data for this product for the last twelve months are as follow ...

Assignment problem questionstask - this assessment task

Assignment: Problem questions Task - This assessment task consists of five (5) questions. Question 1 - Financial statement disclosures You are the financial accountant for Rainyday Ltd, and are in the process of preparin ...

James lives in maryland but works in virginia john lives in

James lives in Maryland but works in Virginia. John lives in Virginia but works in Maryland. John believes he has been taken advantage of by Jim in a business dealing. John has paid Jim a down payment to paint his house ...

Rayburn industries is evaluating the investment of 144900

Rayburn Industries is evaluating the investment of $144,900 in a new packing machine that should provide annual cash operating inflows of $31,060 for 6 years. At the end of 6 years, the packing machine will be sold for $ ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate