Section Break Chapter 01 Problem 1-26 LO 1-6 Young Company has a 7 percent annual interest rate on its bank loan which the company is in the process of repaying. The loan currently has a principal balance of $15 million. Young Company provides financial statements to the bank in order to meet the bank's loan requirements. Young prepares its financial statements with some help from a local CPA, who provides advice in preparing journal entries and closing the books. Young Company approached several other banks and found two that were willing to offer loans at competitive rates. Country Valley Bank offers a 6% annual interest rate for small businesses that involve a CPA in helping prepare their financial statements. Community Bank offers a 4.5% rate on its loan but would require that Young Company have its financial statements separately audited by an independent CPA firm each year to get that lower rate. Young Company reached out to a local CPA firm and received an estimate of $145,000 annually to provide an independent audit opinion on Young's financial statements each year. Chapter 01 Problem 1-26 Part b Required: b1. Calculate the annual costs of the loan for Young Company under each loan scenario. Be sure to include the costs of interest and of hiring the CPA or CPA firm. Note: Enter your answers in whole dollars and not in millions. For example, $4,000,000 rather than $4. Loan Interest Amount CPA Costs Annual Cost 1. Existing loan - 7% rate on $15 million 2. Country Valley Bank - 6% rate on $15 million 3. Community Bank -4.5% rate on $15 million b2. Use these analyses to justify your recommendation as to whether Young Company should keep its current loan or accept one of the new loan offers. O Existing loan - 7% rate on $15 million. Country Valley Bank - 6% rate on $15 million. Community Bank - 4.5% rate on $15 million