The wilmoths plan to purchase a house but want to determine the after-tax cost of financing its purchase. given their projected taxable income, the wilmoths are in the 24% federal income tax bracket and the 8% state income tax bracket (i. e., an aggregate marginal tax bracket of 32%). assume that the wilmoths will benefit from itemizing their deductions for both federal and state purposes. the total cash outlay during the first year of ownership will be $23,400 ($1,200 principal payments, $22,200 qualified residence interest payments). as a result, the annual after-tax cost of financing the purchase of the home will be $

$16,296

Explanation:

Qualified residence interest payments = $22,200

Principal payments = $1,200

First year of ownership = $23,400

The annual after-tax cost of financing the purchase of the home will be :

= Installment - tax saving

= $(23,400 - $7,104)

= $16,296

Note:

Tax Saving = 32 %  of Interest amount

                   = 32% × 22,200

                   = $7,104

hi : ) i found this so i hope this !

"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"