15
QuizMultiple Choice

Buying vs. Renting a Home

Question 15 • ****Spring 2026 Financial Math - MA2007 MQS21QXV

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
A
$670
B
$782
C
$814
D
$837

Explanation

Buying now costs $6,000 + 36($726) = $32,136 over three years. Renting costs 37 monthly rent payments (the move-in month's rent plus 36 months of rent) and the $2,000 security deposit, for a total of 37r + $2,000. Setting this equal to the buying cost gives r = ($32,136 − $2,000) ÷ 37 ≈ $814, so the maximum monthly rent is about $814, choice C.

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