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3-2 Opportunity Cost of Renting You currently pay $10,000 per year in rent to a landlord for a $100,000 house, which you are considering purchasing.

3-2 Opportunity Cost of Renting
You currently pay $10,000 per year in rent to a landlord for a $100,000 house, which you are
considering purchasing. You can qualify for a loan of $80,000 at 9% if you put $20,000 down
on the house. To raise money for the down payment, you would have to liquidate stock earning a
15% return. Neglect other concerns, like closing costs, capital gains, and tax consequences of
owning, and determine whether it is better to rent or own.

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