Question
Viola has to relocate for her job. She finds a townhome with an option to rent or buy. The conditions of each are shown below.
Rent: Move-in costs of $2,380 and monthly payment of $845.
Buy: Move-in costs of $5,260 and monthly payment of $785.
Viola moves frequently due to her job, but she thinks that she will stay in the area for 4 years. Therefore, she decided to buy. Choose the best evaluation of Viola’s decision.
a.
Since the costs would be the same over the 4 year period, she will have made a good decision if the property value does not decrease.
b.
She made a fairly good decision. Buying the townhome will be cheaper over the 4 year period as long as she doesn’t have major repairs to make.
c.
She made a poor decision if the property value does not increase. Renting the townhome would be cheaper over the 4 year period.
d.
There is not enough information given to determine which option is best.
Please select the best answer from the choices provided
A
B
C
D
Rent: Move-in costs of $2,380 and monthly payment of $845.
Buy: Move-in costs of $5,260 and monthly payment of $785.
Viola moves frequently due to her job, but she thinks that she will stay in the area for 4 years. Therefore, she decided to buy. Choose the best evaluation of Viola’s decision.
a.
Since the costs would be the same over the 4 year period, she will have made a good decision if the property value does not decrease.
b.
She made a fairly good decision. Buying the townhome will be cheaper over the 4 year period as long as she doesn’t have major repairs to make.
c.
She made a poor decision if the property value does not increase. Renting the townhome would be cheaper over the 4 year period.
d.
There is not enough information given to determine which option is best.
Please select the best answer from the choices provided
A
B
C
D
Answers
GPT-4o mini
To evaluate Viola's decision to buy the townhome instead of renting, let's break down the costs of each option over a 4-year period.
**Renting:**
- Move-in costs: $2,380
- Monthly payment: $845
- Total monthly payments over 4 years (48 months): $845 * 48 = $40,560
- Total cost of renting over 4 years: $2,380 + $40,560 = $42,940
**Buying:**
- Move-in costs: $5,260
- Monthly payment: $785
- Total monthly payments over 4 years (48 months): $785 * 48 = $37,680
- Total cost of buying over 4 years: $5,260 + $37,680 = $42,940
So, when we calculate the total costs, both renting and buying come to approximately $42,940 over four years.
However, if Viola buys, she may also gain equity if the property value does not decrease, while renting does not provide any such financial benefit.
Based on these evaluations, the best answer to reflect Viola's decision is:
**A. Since the costs would be the same over the 4 year period, she will have made a good decision if the property value does not decrease.**
**Renting:**
- Move-in costs: $2,380
- Monthly payment: $845
- Total monthly payments over 4 years (48 months): $845 * 48 = $40,560
- Total cost of renting over 4 years: $2,380 + $40,560 = $42,940
**Buying:**
- Move-in costs: $5,260
- Monthly payment: $785
- Total monthly payments over 4 years (48 months): $785 * 48 = $37,680
- Total cost of buying over 4 years: $5,260 + $37,680 = $42,940
So, when we calculate the total costs, both renting and buying come to approximately $42,940 over four years.
However, if Viola buys, she may also gain equity if the property value does not decrease, while renting does not provide any such financial benefit.
Based on these evaluations, the best answer to reflect Viola's decision is:
**A. Since the costs would be the same over the 4 year period, she will have made a good decision if the property value does not decrease.**