Your uncle Fred just purchased a new boat. He brags to you about the low 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 ( APR, monthly compounding). But if his tax rate is and the interest on the home equity loan is tax deductible, which loan is truly cheaper?
Your uncle Fred just purchased a new boat. He brags to you about the low 7.2% 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 (8.2% APR, monthly comp
Your best friend consults you for investment advice. You learn that his tax rate is 38%, and he has the following current investments and debts:• A car loan with an outstanding balance of $5,000 and a 4.79 APR (monthly compounding)• Credit cards with an outstanding balance of $10,000 and a 14.94%APR (monthly compounding)• A regular savings account with a $30,000 balance, paying a 5.44% effective annual rate (EAR)• A money market savings account with a $100,000 balance, paying a 5.25% APR (daily compounding)• A tax-deductible home...