A home has a price of $500,000. The down payment will be 20% with a mortgage on the remaining $400,000 with an interest rate of 3%/yr. The monthly mortgage is $1,686.42. The opportunity cost of capital is 7%/yr. The home is expected to increase in value by 2%/year. The property taxes are $6000/yr. Insurance and expected maintenance is $3000/yr. The tax rate is 30%. Assume that the buyer itemizes taxes and can make use of the deductions associated with the home. After computing the explicit and implicit costs, the gain in equity, and the tax benefits, compute the net annual cost for the first year. Use the same procedures we have in solving this type of problem.