Before-tax cost of debt and after-tax cost of debt David Abbot is buying a new house, and he is taking out a30-year mortgage. David will borrow $194,000 from a bank, and to repay the loan he will make 360 monthlypayments (principal and interest) of $1,220.60 per month over the next 30 years. David can deduct interestpayments on his mortgage from his taxable income, and based on his income, David is in the 30% tax bracket.a. What is the before-tax interest rate (per year) on David's loan?b. What is the after-tax interest rate that David is paying?a. The before-tax interest rate (per year) on David's loan is %. (Round to two decimal places.)

We will solve this by using rate function in excel

Before-tax cost of debt and after-tax cost of debt David Abbot is buying a new house, and he is taking out a 30-year mortgage. David will borrow $194,000 from a bank, and to repay the loan he will make 360 monthly bayments (principal and interest) of $1,220.60 per month over the next 30 years. David can deduct interest bayments on his mortgage from his taxable income, and based on his income, David is in the 30% tax bracket. a. What is the before-tax interest rate (per year) on David's loan? o. What is the after-tax interest rate that David is paying? a. The before-tax interest rate (per year) on David's loan is%. (Round to two decimal places.)

Before-tax cost of debt and after-tax cost of debt David Abbot is buying a new house, and he is taking out a 30-year mortgage. David will borrow $194,000 from a bank, and to repay the loan he will make 360 monthly bayments (principal and interest) of $1,220.60 per month over the next 30 years. David can deduct interest bayments on his mortgage from his taxable income, and based on his income, David is in the 30% tax bracket. a. What is the before-tax interest rate (per year) on David's loan? o. What is the after-tax interest rate that David is paying? a. The before-tax interest rate (per year) on David's loan is%. (Round to two decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Dave currently makes monthly payments towards a 25-year mortgage of $290000 with an interest rate of 14.4% compounded monthly.After making the 67th payment, Dave refinanced his mortgage at an interest rate of 8.4% compounded monthly and renegotiated his term. This resulted in Dave's monthly payments being reduced by $700. How large will Dave's final drop payment be? Answer: $NOTE: When calculating a payment or outstanding balance, round appropriately and carry that value through further calculations.
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You are working at Grey Company. You purchased a house in 2020. Gray Company gave you a housing loan on May 1, 2020 for $80,000 at a rate of 2 percent interest. You pay the interest on the loan every month. The 2020 prescribed interest rates are as follows: First quarter Second quarter Third quarter Fourth quarter What is your taxable benefit on the above loan for 2020? A) Nil. B) $267.40. C) $670.68. D) $1,073.97. E) $2,147.95. F) $667.40. 5% 4% 3% 3%
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Help me with this one please im stuck badly
6. Loan Amortization Assume that your aunt sold her house on December 31, and to help close the sale she took a second mortgage in the amount of $30,000 as part of the payment. The mortgage has a quoted (or nominal) interest rate of 12%; it calls for payments every 6 months, beginning on June 30, and is to be amortized over 10 years. Now, 1 year later, your aunt must inform the IRS and the person who bought the house about the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) To the closest cent, what is the total amount of interest that was paid during the first year? Do not round intermediate calculations. Round your answer to the nearest cent. $
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