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Do you work hard to achieve good grades, but does not get success at that level? Studentwhiz has found out a simple yet interesting way to help its students achieve good grades by learning in a smart way through University of Phoenix Roy decides to buy a personal residence and goes to the bank for a $150,000 loan Solutions and Roy decides to buy a personal residence and goes to the bank for a $150,000 loan Course. Our main motive is that our students should pass their exams with flying colors. Roy decides to buy a personal residence and goes to the bank for a $150,000 loan Study Material and Roy decides to buy a personal residence and goes to the bank for a $150,000 loan Guide are also been provided so that students can learn from them. On our learning portal you will get study material which is 100% updated and imparted by our experts.

Roy decides to buy a personal residence and goes to the bank for a $150,000 loan

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Roy decides to buy a personal residence and goes to the bank for a $150,000 loan. The bank tells him that he can borrow the funds at 4% if his father will guarantee the debt. Roy’s father, Hal, owns a $150,000 CD currently yielding 3.5%. The Federal rate is 3%. Hal agrees to either of the following:

  • Roy borrows from the bank with Hal’s guarantee to the bank.
  • Cash in the CD (with no penalty) and lend Roy the funds at 2% interest.

Hal is in the 33% marginal tax bracket. Roy, whose only source of income is his salary, is in the 15% marginal tax bracket. The interest Roy pays on the mortgage will be deductible by him. Which option will maximize the family’s after-tax wealth?

 
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