The ABD Company has decided to witch some debt to its newest The original division, DEMO, in order seshow a more bansom corpoedhe Peobt s288,400.
This amount comes due a amount of the debt to be trammferred balloon note (single payment on luly 1, 1898. The anginal debt carried all% July 1.1998. interest rate for three 13) rears which matures an (s) he ABD Company has required DEMO to repay the entire debt infrwe years. Although, the interest rate for a new company is 9.5%.
DEMO's president says he has a "hook-up" at his "boys' bank that walu gre the division rate (compounded monthly) ABD has required DEMO not to exceed S500,000 per year coshBow cash outlay for the year). excluding salaries and other related persennel cost. You are the new engineer on the block, therefore, you are to do the engineering economic analysis for this situation.
Analyze the repayment of the debt by using the four (4) standard repayment plans for the book up cone. Then the equivalence using the same plans at the expected interest evaluate rate for a new company.