After$-$tax cost of debt Personal Finance Problem Bella Wans is interested in buying a new motorcycle. She has

decided to borrow the money to pay the $$25,000$ purchase price of the bike. She is in the $22\%$ 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 second

mortgage on her home. That mortgage would come with an interest rate of $6\%.$ 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$.$ Should Bella consider any other factors when deciding which loan to take out?