Delos borrowed

80

million two years ago. The loan agreement, an amortizing loan, was for six years at

8.625%

interest per annum. Delos has successfully completed two years of debt-service, but now wishes to renegotiate the terms of the loan with the lender to reduce its annual payments.

a. What were Delos's annual principal and interest payments under the original loan agreement?

b. After two years debt service, how much of the principal is still outstanding?

c. If the loan were restructured to extend another two years, what would be the annual

paymentsprincipal

and interest? Is this a significant reduction from the original agreement's annual payments?

a. What were Delos's annual principal and interest payments under the original loan agreement?

Delos's annual payment under the original loan agreement is

17634663.8217634663.82.

(Round to two decimal places.)The annual principal and interest payments are:(Round to two decimal places.)

Current balance		80,000,000	69,265,336.18
Payments		1	2
Interest		6,900,000.00	5,974,135.25
Principal		10,734,663.82	11,660,528.57

	3	4