kim and dan bergholt are both government workers they are considering purchasing a home for $280,000 utilities are $220 maintenance at $100 property at $380 utilities 220.00 maintenence 100. property taxes 380. insurance 50. there only debt is a ar loan of 350. Kim gross income is 55,000 and dans is 38,000/year they saved 60,000 in a money market fund which earned 5,840. last year the real estate agent tells the bergholts that if they don't want to purchase they might consider renting. thr rental option is 1,400. plus utilities at 220. renters insurance 25. assuming they stay in the same place for 5 years they would like to know if its better to buy or rent. they expect the pric of housing to rise by 3% over the next 5 years. they expect ot earn an annual rate of 5% on the money market fundall othr prices and taxes are expected to increase 3% anual rate after federal state and local taxes they get to keep only 55% of a marginal dollar of earnings. Estimate wheather it is financially more attractive for the bergholts to rent or to purchase the home over 5 years holding period (assuming the contract interest rate of 8% monthly payments over the five year period would total 87,574

This is a complex problem -- especially since your problem mixes annual and monthly expenses and income.

As Writeacher answered in your last post, your question would be easier to read if you used appropriate capitalization and punctuation.

In general, it's often cheaper to rent than to buy, assuming the down payment money is invested wisely. (A 5% money market fund is a good investment.) However, many people opt for the satisfaction of home ownership, even if it costs them more in the long run.

What do you think is their best option?

To determine whether it is financially more attractive for the Bergholts to rent or purchase the home over a 5-year holding period, we need to compare the costs and benefits of both options. Let's break down the calculation step by step:

1. Calculate the costs of buying the home over 5 years:
- Monthly mortgage payment: To calculate the monthly payment on a loan, we need to know the loan amount, interest rate, and loan term. However, the loan amount is not provided in the question. Please provide the loan amount to proceed with the calculation.

2. Calculate the costs of renting the home over 5 years:
- Monthly rent: $1,400
- Monthly utilities: $220
- Monthly renters insurance: $25

Multiply the total monthly cost ($1,400 + $220 + $25) by the number of months in 5 years (60 months) to get the total cost of renting over 5 years.

3. Calculate the growth of housing prices over 5 years:
- The question states that housing prices are expected to rise by 3% annually. To calculate the future value, we need to use compound interest formula: Future Value = Present Value * (1 + interest rate)^number of years.

Calculate the future value of the house over 5 years using the given purchase price of $280,000 and the expected growth rate of 3% annually.

4. Calculate the return on the money market fund over 5 years:
- The money market fund has an initial balance of $60,000 and earned $5,840 in interest last year. We need to calculate the future value of the fund over 5 years using the expected annual interest rate of 5%.

Calculate the future value of the money market fund over 5 years using the given annual interest rate of 5%.

5. Compare the total costs of buying and renting:
- Add up the costs from step 2 (cost of renting) for 5 years.
- Subtract the total return from the money market fund growth over 5 years from the costs of buying (calculated mortgage payment and future value of the house).
- Compare the two totals to determine which option is financially more attractive.

Please provide the missing information (loan amount) to proceed with the calculation.