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Exhibit 9.13 Answer report for integer variables
tax burden in the coming years. The mortgage interest deduction is one of the few
remaining personal income tax deductions available in the US tax code.
Padcha has decided that a short term mortgage of 4–6 years (these are the short-
est terms she can find) is in her best interest since she may sell the yacht soon (2–3
years) after the capture of the initial tax advantages. Knowing that mortgage pay-
ments consist overwhelmingly of interest in early years, she is interested in finding
a loan structure that will lead to a beneficial interest tax deduction while satisfying
other criteria.
Padcha decides to construct a spreadsheet that calculates the cumulative interest
paid for two years for numerous scenarios of principal, term, and interest rate. She
has discussed the problem with a yacht broker in Jakarta, Indonesia, and he has
provided six yacht options for her to consider. He is willing finance the purchase,
and has forwarded the following scenarios to Padcha in Table 9.1:
A spreadsheet for the calculation of the scenarios is shown in Exhibit 9.14.
In Exhibit 9.14 we introduce a new cell formula (see C18 and C19) that is part
of the financial cell formulas contained in Excel— CUMIPMT (rate, nper, pv,
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