(7) Go to the Buying/Renting Calculator of the New York Times http://www.nytimes

(7) Go to the Buying/Renting Calculator of the New York Times
http://www.nytimes.com/interactive/business/buy-rent-calculator.html?ref=economy
(a) Assume the following parameters: monthly rent: $2500; the house price equals 20
times the annual rental income; down payment is 20% the mortgage rate is 4%; expected
annual growth rate of rents are 3% house prices will grow at a 6% rate per year. Property
tax is 1.35% per year. After what time will the purchase of a house be better than
renting?
(b) In general how will inflation (higher rents and house prices) influence the buying
decision? Will it make buying less or more attractive?
(c) How does doubling the down payment change the buying-renting break-even point?