Problem
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?
(c) How much longer will the proposed loan run?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.