Debbie McAdams paid 11% interest on a $8,500 loan balance. Jan Burke paid $5,740 interest on...

Debbie McAdams paid 11% interest on a $8,500 loan balance. Jan Burke paid $5,740 interest on a $70,000 loan. Based on 1 year:

a. What was the amount of interest paid by Debbie?

Interest paid by Debbie $

b. What was the interest rate paid by Jan? (Round your answer to the nearest tenth percent.)

Interest rate paid by Jan %

c. Debbie and Jan are both in the 28% tax bracket. Since the interest is tax deductible, how much will Debbie and Jan each save in taxes? (Round your answers to the nearest cent.)

	Debbie	Jan
Save in taxes	$	$

Expert Solution

A: Interest paid by Debbie = Rate* Loan

= 11%*8500 = $935

B: Interest paid by Jan = $5740

Rate of interest = Interest/ Loan amount

= 5740/70000

= 8.2%

C: Amount saved in taxes = Tax rate * Interest

Debbie = 28%*935 = 261.8

Jan = 28%*5740=1607.2

jeff jeffy answered 2 years ago

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