2. Total loan payments made (\$ per month months) 3. Less: Principal amount of the loan 4. Total interest paid over life of loan 5. Tax considerations: - Is this a home equity loan? no - Do you itemize deductions on your federal tax return? yes 6. What federal tax bracket are you in? 10% 7. Taxes saved due to interest deductions (\$ x %) 8. Total after-tax interest cost on the loan Cost of Paying Cash 9. 10. 11. Net Cost of Borrowing 12. Annual interest earned on savings (3\% x Annual after-tax interest earnings (\$ x %) Total after-tax interest earnings over life of loan (\$ x years) Difference in cost of borrowing versus cost of paying cash $ $ Buy On Time or Pay Cash Cost of Borrowing 1. Terms of the loan a. Amount of the loan $15,000.00 b. Length of the loan (in years) 3 c. Monthly payment $470.10 2. Total loan payments made (\$ per month Less: Principal amount of the loan 3. 4. 5. Total interest paid over life of loan Tax considerations: - Is this a home equity loan? - Do you itemize deductions on your federal tax return? What federal tax bracket are you in? Taxes saved due to interest deductions (\$ x \%) 8. Total after-tax interest cost on the loan Cost of Paying Cash 9. 10. 11. Annual interest earned on savings (3\% x Annual after-tax interest earnings (\$ x %) Total after-tax interest earnings over life of Ioan (\$ x years) Net Cost of Borrowing 12. Difference in cost of borrowing versus cost of paying cash no yes 10% $