Buy On Time or Pay Cash

Cost of Borrowing

$.$

a$.$ Amount of the loan

b$.$ Length of the loan $($in years$)$

c$.$ Monthly payment

Total loan payments made

$($$ per month

Less: Principal amount of the loan

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$?$

months$)$

$$10,000$

$5$

$$188\mathrm{.}70$

$\backslash$table$[[2.],[3.],[4.],[5.],[6.],[7.],[8.],[$Cost of Paying Cash$]]$

Net Cost of Borrowing

Annual interest earned on savings

$(6\%$x

j$)$

Annual after$-$tax interest earnings

$($$

$\%)$

Total after$-$tax interest earnings over life of loan

$x$

$no$

$\{$:$[$ you $in?$

eductions

$\%)]$

$35\%$

Taxes saved due to interest deductions

$($$

$x|\%$