Five years ago you bought a $131,000 building to house your business using a 25
ID: 2662883 • Letter: F
Question
Five years ago you bought a $131,000 building to house your business using a 25 year mortgage at 12% per year paid monthly.a. Since interest paid for business use is tax deductible, how much interest did you pay in the fifth year? In the 6th year?
b. How much interest did you pay in year one?
c. At the end of year 6, your business takes a turn for the better and you decide to pay off the balance of your mortgage in 15 years at 12% (the unchanged interest rate). By how much will your monthly payments change?
d. By how much will tax deductible interest payments change?
Explanation / Answer
Interest in 5th year 14,438.02 Interest in 6th year 14,265.49 Interest in 1st year 14,954.49 Your monthly payments will go from 1,316.53 to 1,416.60. Interest payments won't change in the first month, since it is the same principal balance at the same interest rate. I got these numbers off on online mortgage calculator. Not sure what kind of detail you need to see behind them.
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