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 28% Federal income tax bracket and the 8% state income tax bracket (i.e., an aggregate marginal tax bracket of 36%). The total cash outlay during the first year of ownership will be $ $36,800 ($3,680 principal payments, $33,120 qualified residence interest payments).
If required, round your interim calculation to nearest dollar.
As a result, the annual after-tax cost of financing the purchase of the home will be $