Investing vs Debt Calculation.xlsx
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EARLY DEBT PAYOFF VS. INVEST ANALYSIS
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enter data in yellow cells only
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Overall Assumptions
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Monthly Amount Available:$500.00 consistent extra amount available each month
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Inflation Rate:3.00%average long-term inflation is 3.22%
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Debt Assumptions
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Current Amount Owed:$40,000.00 enter current amount owed, NOT original amount
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Remaining Term:92enter term in months
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Next Payment Date:12/1/2016
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Interest Rate on Debt:6.00%
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Federal Tax Rate for Interest Deduction:15.00%enter 0% tax rate if loan interest is nondeductible
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State Tax Rate for Interest Deduction:4.25%enter 0% tax rate if state doesn't allow deduction
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Investing Assumptions
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Market Rate of Return:7.00%
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Expected Income as Percentage of Return:
10.00%only dividends, interest & cap gains are taxed
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Federal Tax Rate on Investment Income:15.00%check prior year tax return for tax bracket
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State Tax Rate on Investment Income:4.25%check online for current state tax rate
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Invest
Early Debt Payoff
Difference
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Loan Information
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Total Interest Paid(10,001)(4,518)(5,483)
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Tax Savings on Interest Paid 1,925 870 1,056
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Interest, Net of Tax Benefit(8,076)(3,648)(4,428)
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Inflation Adjusted Interest, Net of Tax Benefit
(7,458)(3,514)(3,944)
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Investment Information
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Investment Gain/Income 15,008 8,203 6,805
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Taxes on Dividends & Interest Income(289)(158)(131)
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Gain/Income After Taxes 14,719 8,045 6,674
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Inflation Adjusted Gain/Income After Taxes
12,592 6,651 5,941
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Total Inflation Adjusted Gain (Expense) for Loan Term
5,134 3,137 1,997
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Total Ending Investment Balance at Loan Term
61,008 59,334 1,674
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