Question

Debbie McAdams paid 8% interest on a $5,000 loan balance. Jan Burke paid $4,750 interest on a $50,000 loan. Based on 1 year:

a. What was the amount of interest paid by Debbie?

Interest paid by Debbie            $   

b. What was the interest rate paid by Jan? (Round your answer to the nearest tenth percent.)

Interest rate paid by Jan             %

c. Debbie and Jan are both in the 28% tax bracket. Since the interest is tax deductible, how much will Debbie and Jan each save in taxes? (Round your answers to the nearest cent.)

	Debbie	Jan
Save in taxes	$	$

Answer 1

a.Interest paid by Debbie = 5000*8% = $400

b.Interest paid on Jan = 4,750

C.Savings in taxes = Interest paid = Interest paid*Tax rate

Debbie = 400*28% = $112

Jan = 4,750*28% = $1,330