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Your uncle Fred just purchased a new boat. He brags to you about the low 7.1% interest rate (APR, monthly compounding) he obtained from the
Your uncle Fred just purchased a new boat. He brags to you about the low 7.1% interest rate (APR, monthly compounding) he obtained from the dealer. The rate is even lower than the rate he could have obtained on his home equity loan (8.1% APR, monthly compounding). But if his tax rate is 23% and the interest on the home equity loan is tax deductible, which loan is truly cheaper? C The after-tax cost on the home equity loan is%. (Round to two decimal places.) Which is the cheaper loan? (Select the best choice below.) O A. The boat loan from the dealer is cheaper than the home equity loan when compared on an after-tax basis. OB. The home equity loan is cheaper than the boat loan from the dealer when compared on an after-tax basis. O C. We cannot tell which loan is cheaper since we do not know the value of the principal amounts. O D. Both loans are the same when we account for taxes
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