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?

a. $670

b. $782

c. $814

d. $837

Question

Mathematics

Jax Herrera

4 August, 21:16

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?

a. $670

b. $782

c. $814

d. $837

+1

Answers (1)

Know the Answer?

Antony Anthony · Answer 1

Total amount paid if he bought = 6000 + 726 (12 x 3) = 6000 + 726 (36) = 6000 + 26,136 = 32,136

Total amount paid if he rents = 2000 + 37P, where P is the monthly rent

For renting to be cheaper

2000 + 37P < 32,136

37P < 32136 - 2000 = 30136

P < 30136 / 37 = 814.49

Therefore, the maximum rent he could pay is $814