?David Abbot is buying a new? house, and he is taking out a

30?-year

mortgage. David will borrow

?$198000

from a? bank, and to repay the loan he will make

360

monthly payments? (principal and? interest) of

?$1 225.57

per month over the next

30

years. David can deduct interest payments on his mortgage from his taxable? income, and based on his? income, David is in the

30%

tax bracket.

a. What is the? before-tax interest rate? (per year) on? David's loan?

b. What is the? after-tax interest rate that David is? paying?