After tax cost of debtPersonal Finance ProblemBella 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 28 income tax bracket She can either borrow the money at an interest rate of 4 from the motorcycle dealer, or she could take out a second 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 Should Bella consider any other factors when deciding which loan to take out a The after tax cost of borrowing from the motorcycle dealership is nothing (Round to the nearest whole percentage ) Score 0 of 1 pt 4 of 11 (4 complete HW Score 25 76 , 2 83 of 11 pts P9 6 (similar to) Question Help After tax cost of debt Personal Finance Problem Belle Wans is rested 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 20 income tax brack She can other bow the money at an interest rate of 4 them the motorcycle deale or she could take out a woond more on her home That mogege would come with an interest rate of 8 In payments on the mortgage would be tax deductible for Bola but interest payments on the loan from the motorcycle dealer could not be deducted on Bela's federal tax return a Calculate the t ax cost of borrowing from the motorcycle dealership b Calculate the star tax cost of borrowing through a second mortgage on Bela's home Which source of borrowing is less costly for Bella d Should Bella consider any other factors when deciding which loan to take out Theater tax cost of borrowing from the motorcycle dealership is I (Round to the nearest whole percentage)

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After-tax cost of debtPersonal Finance ProblemBella Wans is interested in buying a new motorcycle. She has decided to borrow the money to pay the $25,000

After-tax cost of debtPersonal Finance ProblemBella 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

28%

income tax bracket. She can either borrow the money at an interest rate of

from the motorcycle dealer, or she could take out a second 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.Should Bella consider any other factors when deciding which loan to take out?

a. The after-tax cost of borrowing from the motorcycle dealership is

nothing%.

(Round to the nearest whole percentage.)

image text in transcribed

Score: 0 of 1 pt 4 of 11 (4 complete HW Score: 25.76%, 2.83 of 11 pts P9-6 (similar to) Question Help After-tax cost of debt Personal Finance Problem Belle Wans is rested 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 20% income tax brack. She can other bow the money at an interest rate of 4% them the motorcycle deale or she could take out a woond more on her home. That mogege would come with an interest rate of 8%In payments on the mortgage would be tax deductible for Bola but interest payments on the loan from the motorcycle dealer could not be deducted on Bela's federal tax return a. Calculate the t ax cost of borrowing from the motorcycle dealership b. Calculate the star tax cost of borrowing through a second mortgage on Bela's home Which source of borrowing is less costly for Bella? d. Should Bella consider any other factors when deciding which loan to take out? Theater-tax cost of borrowing from the motorcycle dealership is I (Round to the nearest whole percentage)