This is as straightforward as it looks. The company is simply trying to save money by shortening the term of the original note of $100,000. So, the savings would be:
$100,000 x 5%/2 x (10 x 2) =$50,000 - interest that the co. would pay in 10 yeras.
$50,000 x 5%/2 x (5 x 2) =$12,500 - interest that the co. would pay in 5 years.
$50,000 x 5%/2 x (7 x 2) =$17,500 - interest that the co. would pay in 7 years.
Therefore, the savings to the company would be:
$50,000 - [$12,500+$17,500] =$20,000 - total savings to the company.
