Your sister's pet supplies 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 for the first year of the loan? (Assume she took out the loan on January 1.)

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The correct answer is A. The interest tax deduction for the first year of the loan is $17,419.55. This is calculated as follows:Interest paid in first year = $250,000 x 7.0% x 12 / 360 = $5,833.33Interest tax deduction = $5,833.33 x (1 - tax rate) = $5,833.33 x (1 - 0.35) = $3,801.67Total interest tax deduction for first year = $5,833.33 + $3,801.67 = $17,419.55

Your Sister's Pet Supplies Business Obtained a 30-Year Amortized Mortgage