You are enrolling in an MBA program. To pay your$$ tuition, you can either take out a standard student loan$($so the interest payments are not tax$$ deductible$)$ that has an EAR of

$5\mathrm{.}8\%5\mathrm{.}8\%$

or you can use a$$ tax$-$deductible home equity loan with an APR$($monthly compounding$)$ of

$6\mathrm{.}3\%6\mathrm{.}3\%.$

You anticipate being in a very low tax$$ bracket, so your tax rate will be only

$18\%18\%.$

Which loan should you$$ use?

Question content area bottom

Part $1$

The$$ after$-$tax interest rate on the home equity loan is

enter your response here$\%.$

$($Round to two decimal$$ places.$)$

Part $2$

The loan you should use$$ is: $($Select the best choice$$ below.$)$

A$.$The standard student loan.

The standard student loan.The$$standard$$student$$loan$.$

B$.$The home equity loan.

The home equity loan.The$$home$$equity$$loan$.$

C$.$

Either$$ loan, because the rates are the same.

D$.$

Neither$$ loan, because the rates are too$$ high,