Your brother's business obtained a 30-year amortized mortgage loan for $250,000 at a nominal annual rate of 7.0%, with 360 end-of-month payments. the firm can deduct the interest paid for tax purposes. what will the interest tax deduction be for year 1?

Question

Nielsen

Business

9 November, 17:33

Your brother's business obtained a 30-year amortized mortgage loan for $250,000 at a nominal annual rate of 7.0%, with 360 end-of-month payments. the firm can deduct the interest paid for tax purposes. what will the interest tax deduction be for year 1?

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Answers (2)

Know the Answer?

Ariana Chang · Answer 1

You would first need to calculate the payment on this loan and then construct an amortization table.

Your payment would be $1,663.26

and with you table set up properly, you would pay $17,419.55 in interest for the first year

Duran · Answer 2

Answer: $1663.26 and $17,419.56

Explanation:

Monthly payment on mortgage

= Amount * (r/n) / (1 - (1+r/n) ^-n*t

Where:

Amount = $250,000

r = 7%

n = year in months = 12

t = no of years = 30

= $250000 * (0.07/12) / (1 - (1+0.07/12) ^ - 12*30

= $1663.26.

Tax deduction for year 1 would sum up to $17,419.56