Rico needs approximately $2,300 to buy a new computer. A two-year unsecured loan through the credit union is available for 13.00 percent interest. The current rate on his revolving home equity line is 9.75 percent, although he is reluctant to use it. Rico is in the 15 percent federal tax bracket and the 5.75 percent state tax bracket. Which loan should he choose? Why? Regardless of the loan chosen, Rico wants to pay off the loan in 24 months. Calculate the monthly payments for him, assuming both loans use the simple interest calculation method.

The after-tax cost of the home equity loan is ?_______

The payment on the credit union loan would be?_____

The payment on the home equity loan would be?____

The savings from the difference in payment over the life of the loan is?_____

The tax savings over the life of the home equity loan is? The total savings over the life of home equity loan is?_____