Maurice Tutor

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About Maurice Tutor

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Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 408 Weeks Ago, 4 Days Ago
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Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

Experience

  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 06 Jan 2018 My Price 7.00

motorcycle dealership

Bella is interested in buying a new motorcycle. She has decided to borrow money to pay the $20,000 purchase price of the bike. She is in the 25% federal income tax bracket. She can either borrow the money at an interest rate of 5% from the motorcycle dealer, or she could take out a mortgage on her home. That mortgage would come with an interest rate of 8%. Interest payments on the mortgage would be tax deductible for Bella, but interest payments on the loan from the motorcycle dealer could not be deducted on Bella's federal tax return.

a. Calculate the after-tax cost of borrowing from the motorcycle dealership.
b. Calculate the after-tax cost of borrowing through a second mortgage on Bella's home.
c. Which source of borrowing is less costly for Bella?
d. Is there any other consideration that Bella ought to think about when deciding which loan to take out to pay for the motorcycle?

Answers

Maurice Tutor
(5)
Status NEW Posted 06 Jan 2018 10:01 PM My Price 7.00

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