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On January 1, 2013, your brother's business obtained a 30-year amortized mortgage loan for $350,000 at a nominal annual rate of  7.35%, with 360 end-of-month payments. The firm can deduct the interest paid for tax purposes. What will the interest tax deduction be for 2014 (sencond year mortgage interest expense)?Calculate using at least 4 decimal points and round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72 in the answer box provided. A. $23,079.40B. $25,869.22C. $24,601.12D. $26,883.70E. $25,361.98

Question
On January 1, 2013, your brother's business obtained a 30-year amortized mortgage loan for $350,000 at a nominal annual rate of  7.35%, with 360 end-of-month payments. The firm can deduct the interest paid for tax purposes. What will the interest tax deduction be for 2014 (sencond year mortgage interest expense)?

Calculate using at least 4 decimal points and round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72 in the answer box provided.
 
A. $23,079.40
B. $25,869.22
C. $24,601.12
D. $26,883.70
E. $25,361.98
check_circleAnswer
Step 1

We can find the interest expenses for the year 2014 by accumulating the interest portion of each fo themonthly payment from period number 13 to period no. 24. We will make use of the excel function CUMIPMT.

Step 2

Please see the white board. Please be guided by the last column to understand the mathematics. The cells highlighted in yellow contain your answer. Figures in pa...

к
L
М
7.3500%
0.6125% =L10/12
10 Nominal annual rate
11 Rate
12 Term (years)
30
360L12 12
13 Nper
Start period number
(Jan 2014 is 13th
14 month fro Jan 2013)
15 End period number
13
24
350000
16 PV
Interest for the year
-25,361.98CUMIPMT(L11,L13, L16, L14, L15,0)
17 2014
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к L М 7.3500% 0.6125% =L10/12 10 Nominal annual rate 11 Rate 12 Term (years) 30 360L12 12 13 Nper Start period number (Jan 2014 is 13th 14 month fro Jan 2013) 15 End period number 13 24 350000 16 PV Interest for the year -25,361.98CUMIPMT(L11,L13, L16, L14, L15,0) 17 2014

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