viola has to relocate for her job. she finds a townhome with an option to rent or buy. the conditions of…

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.\nrent: move - in costs of $2,380 and monthly payment of $845.\nbuy: move - in costs of $5,260 and monthly payment of $785.\nviola 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 violas decision.\na. 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.\nb. she made a fairly good decision. buying the townhome will be cheaper over the 4 - year period as long as she doesnt have major repairs to make.\nc. she made a poor decision if the property value does not increase. renting the townhome would be cheaper over the 4 - year period.\nd. there is not enough information given to determine which option is best.

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.\nrent: move - in costs of $2,380 and monthly payment of $845.\nbuy: move - in costs of $5,260 and monthly payment of $785.\nviola 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 violas decision.\na. 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.\nb. she made a fairly good decision. buying the townhome will be cheaper over the 4 - year period as long as she doesnt have major repairs to make.\nc. she made a poor decision if the property value does not increase. renting the townhome would be cheaper over the 4 - year period.\nd. there is not enough information given to determine which option is best.

Answer

Explanation:

Step1: Calculate total rent cost

First, find the number of months in 4 years. There are 12 months in a year, so 4 years have $4\times12 = 48$ months. The move - in cost for rent is $2380$ and the monthly rent is $845$. The total rent cost $C_{r}$ is the sum of the move - in cost and the total monthly payments. So $C_{r}=2380 + 845\times48$. $C_{r}=2380+40560=42940$.

Step2: Calculate total buy cost

The move - in cost for buying is $5260$ and the monthly payment for buying is $785$. The total buy cost $C_{b}$ is the sum of the move - in cost and the total monthly payments. So $C_{b}=5260+785\times48$. $C_{b}=5260 + 37680=42940$.

Since the total cost of renting and buying over 4 years is the same ($42940$), the decision depends on the property value change. If the property value does not decrease, buying can be a good decision as she will own the property at the end.

Answer:

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.