Your boss has asked you to evaluate the economic viability of refinancing a loan on your plant's process equipment. The original loan of $400,000 was for 7 years. The payments are monthly and the nominal interest rate on the current loan is 6% per year. As of the present time, your company has had the loan for 36 months. The new loan would be for the current balance (i.e. the balance at the end of the 36th month on the old loan) with monthly payments at a nominal interest rate of 3% per year for 4 years. A one-time financing fee for the new loan is $10,000. Your company's MARR is 9% per year on a nominal basis. Determine if the new loan is economically advantageous. The present worth of the difference between the original financing plan and the new (proposed) financing plan is $ (Round to the nearest dollar.)
Your boss has asked you to evaluate the economic viability of refinancing a loan on your plant's process equipment. The original loan of $400,000 was for 7 years. The payments are monthly and the nominal interest rate on the current loan is 6% per year. As of the present time, your company has had the loan for 36 months. The new loan would be for the current balance (i.e. the balance at the end of the 36th month on the old loan) with monthly payments at a nominal interest rate of 3% per year for 4 years. A one-time financing fee for the new loan is $10,000. Your company's MARR is 9% per year on a nominal basis. Determine if the new loan is economically advantageous. The present worth of the difference between the original financing plan and the new (proposed) financing plan is $ (Round to the nearest dollar.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Your boss has asked you to evaluate the economic viability of refinancing a loan on your plant's process equipment. The original loan of $400,000 was for 7 years. The
payments are monthly and the nominal interest rate on the current loan is 6% per year. As of the present time, your company has had the loan for 36 months. The new loan
would be for the current balance (i.e. the balance at the end of the 36th month on the old loan) with monthly payments at a nominal interest rate of 3% per year for 4 years.
A one-time financing fee for the new loan is $10,000. Your company's MARR is 9% per year on a nominal basis. Determine if the new loan is economically advantageous.
The present worth of the difference between the original financing plan and the new (proposed) financing plan is $
(Round to the nearest dollar.)
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