Please show your work.

ABC Corporation is requesting a loan for repair of some assembly-line equipment in the amount of $13.65 million. The nine-month loan is priced by Farmers Financial Corporation at a 8.45 percent rate of interest. However, the finance company tells ABC that if it obtains a suitable credit guarantee the loan will be priced at 7.15 percent. XYZ Bank agrees to sell ABC a standby credit guarantee for $11,500.

(1) How much is ABCs interest savings from this credit guarantee?

(2) Is ABC likely to buy the standby credit guarantee XYZ Bank has offered?