Ziegler Corporation (ZC) borrowed $100,000 for a 5-year period 2 years ago.

The annual interest rate is 12% with quarterly payments. The amortization rate is based on a 10-year period.

ZC has the opportunity to refinance the amount currently due today for 8 years. The interest rate would be 11% and annual payments would be required. The closing costs and legal fees on the new loan would be 2% of the new loan. (Note: The new loan would consist of the amount currently due on the old loan plus the closing costs and legal fees.)

Required:

1. Determine the balloon payment that would be due at the end of the 5-year period for the initial loan.

2. Determine the amount of the new loan.

3. Determine the annual payment for the new loan.