Homework #4-Case Study-Benefit Cost Analysis Practice Subject: ABC is requesting authorization to enter a real estate mortgage agreement with the Bank of Rhode Island for an amount up to outstanding indebtedness to that bank under a note and mortgage that will mature on May 19, 2016 (the "2006 Credit Facility"). The proposed 2016 Credit Facility will allow for continuation of the amortization schedule provided under the expiring 2006 Credit Facility, under comparable terms and conditions. Under current market conditions, the interest rate for the next ten years of the 2016 Credit Facility is anticipated to be 4.86%, compared to the current interest rate of 7.77%. There is an issuance cost of $20,000 for the loan arrangement. Bank of Rhode liand for an amount up to $25s40 he "2016 Credit Faeiity )toretin Answer the following questions: 1. How much will the Company save from this interest rate difference over a ten- 2. Based on the cost-benefit analysis, do you think the company should refinance the 3. How much is the t present value? year period? existing loan? If, then why? tolap