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Thank you! Before-tax cost of debt and atter-tax cost of debt. David Abbot is buying a new house, and he is taking out a 30
Thank you! Before-tax cost of debt and atter-tax cost of debt. David Abbot is buying a new house, and he is taking out a 30 -year mortgage. David will borrow $209,000 from a bank, and to repay the loan he will make 360 monthly payments (principal and interest) of $1,227.65 per month over the next 30 years. David can deduct interest payments on his morigage from his taxable income, and based on his income. David is in the 32% tax bracket. a. What is the before-tax interest rate (per yoar) on Davids loan? b. What is the after-tax interest rate that Dovid is paying? a. The before-tax interest rate (per year) on David's loan is W. (Round to hwo decimal places.)
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