Energymax engineering constructed a small office building, Ask an Expert

Economics

EnergyMax Engineering constructed a small office building for their firm 5 years ago. They financed it with a bank loan for $450,000 over 15 years at 12% interest with quarterly payments and compounding. The loan can be repaid at any time without penalty. The loan can be refinanced through an insurance firm for 8% over 20 years-still with quarterly compounding and payments. The new loan has a 5% loan initiation fee, which will be added to the new loan.

(a) What is the balance due on the original mortgage (20 payments have been made in last 5 years)?

(b) How much will Energy Max's payments drop with the new loan?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M92634858

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