Question

Miguel wants to buy a condominium. He has the choice of buying it now or renting it with the option to buy at the end of 3 years. If he buys it now, it will cost him $6,000 to close and his mortgage payment will be $726 per month. If he rents, he must pay a move-in cost of one month's rent and a security deposit of $2,000.
Miguel decides to rent because it is the cheapest option over the first 3 years. To the nearest dollar, what is the maximum amount of monthly rent payment he could pay?

Answer 1

Cost to buy for 3 years = 6000 + 726(36) = 6000 + 26,136 = 32,136.

Renting cost for 3 years = 36 months of rent + move-in cost (1 month's rent) + $2,000 deposit
= 37R + 2,000.

Require 37R + 2,000 ≤ 32,136 → 37R ≤ 30,136 → R ≤ 30,136/37 ≈ 814.486.

To the nearest dollar, the maximum monthly rent is $814.