To determine the best housing option based on your budget, we need to calculate the total cost of each option over the span of one year, which includes both the monthly costs and up-front costs.
1. Option A: Buying a house
- Monthly cost: [tex]$618
- Up-front cost: $[/tex]24,000
- Total annual cost: (Monthly cost 12 months) + Up-front cost
- Calculations: (618 12) + 24,000 = 7,416 + 24,000 = [tex]$31,416
2. Option B: Renting close to work
- Monthly cost: $[/tex]950
- Up-front cost: [tex]$1,900
- Total annual cost: (Monthly cost * 12 months) + Up-front cost
- Calculations: (950 * 12) + 1,900 = 11,400 + 1,900 = $[/tex]13,300
3. Option C: Renting farther out
- Monthly cost: [tex]$600
- Up-front cost: $[/tex]1,200
- Total annual cost: (Monthly cost 12 months) + Up-front cost
- Calculations: (600 12) + 1,200 = 7,200 + 1,200 = [tex]$8,400
Comparing these total annual costs:
- Option A: $[/tex]31,416
- Option B: [tex]$13,300
- Option C: $[/tex]8,400
The best financial decision based on total cost is Option C (Rent farther out), as it has the lowest total cost for the year at $8,400.
