Consider the following: Purchase Price: $800,000 Amount financed: 85% Interest rate: 7.25% Amortization period: 30 years Investors tax rate: 35% Calculate:

Loan amount (round to nearest dollar)Interest paid year one (round to nearest dollar)Reduction in taxes (round to nearest dollar)Effective interest rate (round to tenth of a percent)State whether this will 'increase' or 'decrease' the true cost of funds for the investor?