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Mika 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 now, he could put $0 down, but he must pay closing costs of $7,100. His monthly mortgage payment will be $675. Mika decides to rent instead of buy because it is the cheapest option over the first 3 years. His move-in costs are one month's rent and a $750 security deposit.To the nearest dollar, what is the maximum amount of monthly rent payment he could pay?

Verified Answer :

dhoadl02

C) $828


Explanation:


in three years Mika will pay:


closing costs + 36 monthly payments = $7,100 + ($675 x 36) = $7,100 + $24,300 = $31,400


his move in costs are $750 + 1 month rent, so:


$750 + 37R = $31,400            where R = rent per month


37R = $30,650


R = $30,650 / 37 = $828

The maximum amount of monthly rent payment he could pay is to be considered as the $828.

Calculation of the maximum amount of monthly rent payment:

But before that the amount should be

= closing costs + 36 monthly payments

= $7,100 + ($675 (36)

= $7,100 + $24,300

= $31,400

Now

$750 + 37R = $31,400        

37R = $30,650

R = $828

Hence, The maximum amount of monthly rent payment he could pay is to be considered as the $828.

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