Please exlpane these step by step. Preferable please use a calculator. Thank you
ID: 2466112 • Letter: P
Question
Please exlpane these step by step. Preferable please use a calculator. Thank you!
The following exercise is designed to be solved using technology such as calculators or computer spreadsheets.
Interest paid on a home mortgage is normally tax deductible. That is, you can subtract the total mortgage interest paid over the year in determining your taxable income. This is one advantage of buying a home. Suppose you take out a 30-year home mortgage for $250,000 at an APR of 8% compounded monthly. The mortgage payments details for the first year are given below.
Does this make the $250,000 home seem a bit less expensive? 14070%. What is your actual tax savings due to mortgage payments? (Round your answer to the nearest cent.)
Month Initial balance +Interest Payment Final balance Equity 1 $250,000.00 1,666.67 $1,834.41 $249,832.26 $167.74 2 $249,832.26 1,665.55 $1,834.41 $249,663.40 $336.60 3 $249,663.40 1,664.42 $1,834.41 $249,493.41 $506.59 4 $249,493.41 1,663.29 $1,834.41 $249,322.28 $677.72 5 $249,322.28 1,662.15 $1,834.41 $249,150.02 $849.98 6 $249,150.02 1,661.00 $1,834.41 $248,976.61 $1,023.39 7 $248,976.61 1,659.84 $1,834.41 $248,802.04 $1,197.96 8 $248,802.04 1,658.68 $1,834.41 $248,626.31 $1,373.69 9 $248,626.31 1,657.51 $1,834.41 $248,449.41 $1,550.59 10 $248,449.41 1,656.33 $1,834.41 $248,271.33 $1,728.67 11 $248,271.33 1,655.14 $1,834.41 $248,092.05 $1,907.95 12 $248,092.05 1,653.95 $1,834.41 $247,911.59 $2,088.41Explanation / Answer
Answer:
Actual tax saving in 30 years=410387.60
Actual tax saving in one year=19924.53
Month Initial balance +Interest Payment Final balance Equity 1 $250,000.00 1,666.67 $1,834.41 $249,832.26 $167.74 2 $249,832.26 1,665.55 $1,834.41 $249,663.40 $168.86 3 $249,663.40 1,664.42 $1,834.41 $249,493.41 $169.99 4 $249,493.41 1,663.29 $1,834.41 $249,322.29 $171.12 5 $249,322.29 1,662.15 $1,834.41 $249,150.03 $172.26 6 $249,150.03 1,661.00 $1,834.41 $248,976.62 $173.41 7 $248,976.62 1,659.84 $1,834.41 $248,802.05 $174.57 8 $248,802.05 1,658.68 $1,834.41 $248,626.32 $175.73 9 $248,626.32 1,657.51 $1,834.41 $248,449.42 $176.90 10 $248,449.42 1,656.33 $1,834.41 $248,271.34 $178.08 11 $248,271.34 1,655.14 $1,834.41 $248,092.07 $179.27 12 $248,092.07 1,653.95 $1,834.41 $247,911.61 $180.46 13 $247,911.61 1,652.74 $1,834.41 $247,729.94 $181.67 14 $247,729.94 1,651.53 $1,834.41 $247,547.06 $182.88 15 $247,547.06 1,650.31 $1,834.41 $247,362.97 $184.10 16 $247,362.97 1,649.09 $1,834.41 $247,177.65 $185.32 17 $247,177.65 1,647.85 $1,834.41 $246,991.09 $186.56 18 $246,991.09 1,646.61 $1,834.41 $246,803.28 $187.80 19 $246,803.28 1,645.36 $1,834.41 $246,614.23 $189.05 20 $246,614.23 1,644.09 $1,834.41 $246,423.91 $190.32 21 $246,423.91 1,642.83 $1,834.41 $246,232.33 $191.58 22 $246,232.33 1,641.55 $1,834.41 $246,039.47 $192.86 23 $246,039.47 1,640.26 $1,834.41 $245,845.32 $194.15 24 $245,845.32 1,638.97 $1,834.41 $245,649.88 $195.44 25 $245,649.88 1,637.67 $1,834.41 $245,453.14 $196.74 26 $245,453.14 1,636.35 $1,834.41 $245,255.08 $198.06 27 $245,255.08 1,635.03 $1,834.41 $245,055.70 $199.38 28 $245,055.70 1,633.70 $1,834.41 $244,855.00 $200.71