?Bella Wans is interested in buying a new motorcycle. She has decided to borrow the money...

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?Bella Wans is interested in buying a new motorcycle. She hasdecided to borrow the money to pay the ?$20,000 purchase price ofthe bike. She is in the 25?% income tax bracket. She can eitherborrow the money at an interest rate of 4?% from the motorcycle?dealer, or she could take out a second mortgage on her home. Thatmortgage would come with an interest rate of 6?%. Interest paymentson the mortgage would be tax deductible for? Bella, but interestpayments on the loan from the motorcycle dealer could not bededucted on? Bella's federal tax return.
a. Calculate the ?after-tax cost of borrowing from themotorcycle dealership.
b. Calculate the ?after-tax cost of borrowing through a secondmortgage on? Bella's home.
c. Which source of borrowing is less costly for? Bella?
d .Should Bella consider any other factors when deciding whichloan to take? out?

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?Bella Wans is interested in buying a new motorcycle. She hasdecided to borrow the money to pay the ?$20,000 purchase price ofthe bike. She is in the 25?% income tax bracket. She can eitherborrow the money at an interest rate of 4?% from the motorcycle?dealer, or she could take out a second mortgage on her home. Thatmortgage would come with an interest rate of 6?%. Interest paymentson the mortgage would be tax deductible for? Bella, but interestpayments on the loan from the motorcycle dealer could not bededucted on? Bella's federal tax return.a. Calculate the ?after-tax cost of borrowing from themotorcycle dealership.b. Calculate the ?after-tax cost of borrowing through a secondmortgage on? Bella's home.c. Which source of borrowing is less costly for? Bella?d .Should Bella consider any other factors when deciding whichloan to take? out?