January 1, 2009, Your Brother's Business Obtained a 30-Year Amortized

question 157

Multiple Choice

January 1, 2009, 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 2009?

• A)$17,419.55
• B)$17,593.75
• C)$17,769.68
• D)$17,947.38
• E)$18,126.85

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Definitions:

Opportunity Cost

The outcome of selecting an alternative is the exclusion of potential benefits that could have been achieved with other selections.

Equilibrium Output

The level of output at which the quantity supplied equals the quantity demanded, leading to a stable market condition without surplus or shortage.

Purely Competitive Market

A theoretical market structure characterized by an infinate number of buyers and sellers, homogeneous products, and no barriers to entry or exit.

Consumer Surplus

The distinction between what consumers are willing and able to allocate financially for a good or service, and what they actually allocate.