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Dunder Corporation has an existing loan in the amount of million with an annual interest rate of 62%. The company provides an internal company prepared financial stateme the bank under the loan agreement Two competing banks have offered to replace Dunder Corporation's existing loan agreement with a new one. First Capital Bank has offered Ioan Dunder 5 million at a rate of 15 but requires under to provide financial statements that have been reviewed by a CPA firm Green Back Bank has offered to loan Dunde milion state of Los but requires under to provide financial statements that have been audited by a CPA firm Dunder Corporations controller approached a CPA firm and given an estimated cost of $31.000 to perform a review and 561 000 to perform an aust Read the same (Enter amounts in dollars, not milions throughout) Requirement. Explain why the interest rate for the loan that requires a review report is lower than that for the loan that does not require a review Explain why the Interest ratefu the loan that requires an audit report is lower than the Interest rate for the other two loans information risk. A review report provid The interest rate for the loan that requires a new report is lower than the loan that does not require a review because of the lower assurance to financial statement en compared to a review report an audit provides further assurance and thus lower information As a result the interest rate is lowest for the loan with the audit report Requirement b. Calculate Dunder Corporation's annual costs under each an agreement, including interest and costs for the CPA firm's services Indicate whether Dunder should keep its existing loan accept the offer from First Capital Bank, or accept the other from Green Back Bank Begin by calculating the annual costs under each loan agreement (Complete all input fields. Enter a "for any zero balances) Cost of CPA Annual Loan Lender Services Annual interest Cost Existing loan (No CPA service) First Capital Bank CPA Review service Gre Back Bank CPA Audit service Indicate whether under should keep its existing loan, accept the offer from Frot Capital Bank or accept the offer from Green Back Bank Based on the analysis in the preceding stup Dunder should Requirements. Assume that First Capital Bank has offered ost of the audit has increased to $125,000 due to new auditing andards requirements indicate whether under should accept the offer from First Capital Bank Bank, or accept the offer from Green Back Bank Begin by calculating costs under each an agree y zero balances) accept the offer from Green Back Bank an Lander ilan No CPA service Capital Bank CPA Review service GB Bank CPA Advice whether under shouldeeping fan cep the offer from Fest Capital Bank of the offer from Geren Back Bank Best on the way is the preceding Dunder should Rechy Dunder my desting the potection in www standing of the dis business may increase thee of the device Corporation has an existing loan in the amount of 56 under the agreement Two competing banks have offered to replace Dunder Corporabo date of 515 but requires Dunder to provide financial statements that have been reviewed by a Chile of 4 but requires Dunder to provide financial statements that have been audited by a CPA firm. Dunder Corporation's controller approached a estimated cost of $31.000 to perform a review and 561,000 to perform an audit (Enamounts in dollars, not milions throughout et a. Explain why the Interest rate for the loan that requires a review report is lower than that for the loan that does not require a review Explain why the interest rate for that requires an audit report is lower than the interest rate for the other two ans est rate for the loan that requires a review report is lower than the loan that does not require a review because of the lower wormation risk A review report provides assurance to financial statement users Compared to a review report an audit provides further assurance and thus lower on risk As a result the interest rate is lowest for the loan with the audit report b. Calculate Dunder Corporation's annual costs under each loan agreement, including interest and costs for the CPA firm's services Indicate whether under should existing loan accept the offer from First Capital Bank, or accept the offer from Green Back Bank calculating the annual costs under each loan agreement (Complete all input fields. Enter a "U" for any zero balances) Cost of CPA Annual Loan Services Annual interest Cost loan No CPA service) apital Bank CPA Review service) Back Bank CPA Audit Service) whether under should keep its existing loan, accept the offer from First Capital Bank, or accept the other from Green Back Bank on the analysis in the preceding step. Dunder should etc. Assume that First Capital Bank has offered the loan a rate of 51% with a review and the cost of the audit has increased to $126,000 de to new auding rds requirements indicate whether Dunder should keep its existing loan accept the offer from First Capital Bank or accept the offer from Green Back Bank y calculating the annual costs under each loan agreement (Complete all input fields. Enter a "for any zero balances) Cost of CPA Annual Loan Services Annual Interest Cost ng loan No CPA service) Capital Bank (CPA Review service) Back Bank CPA Audit Service) whether under should keep its existing loan, accept the offer from First Capital Bank, or accept the offer from Green Back Bank on the analysis in the preceding step. Dunder should rement d. Discuss why Dunder may desire to have an osts keep its existing loan may desire to have an audit because accept the offer from Green Back Bank iremente. Explain how a strategic understanding of accept the offer from First Capital Bank di service assing a strategic understanding of the client's business will help the auditor Requirement. Explain why the Interest rate for the loan that requires a wiew report is lower than that for the loan that does required bothequires and report is lower than the Interest rate for the other two loans Information visk A review report provides The state for the loan that requires a view report is lower than the loan that does not require a review because of the lower modele surance to financial statement sers Compared to a review report an audit provides further assurance and the lower for the loan with the wodit report Requirement Calculate Dunder Corporation's annual costs under each an agreement, including interest and costs for the CPA firm's services Indicate whether under should esting an the offer from First Capital Bank or accept the offer from Green Back Bank Begin by calculating the anal costs under each loan agreement (Complete all input fields Enter for any ze balances) Cost of CPA Annual Loan Lender Services Annual Interest Cost Existing loan No CPA service) First Capital Bank CPA Review service) Green Back Bank CPA Audit service) Indicate whether under should keep its existing loan, acout the other from First Capital Bank, or accept the offer from Green Back Bank Based on the analysis in the preceding Dunder should Requirement. Assume that First Captal Bank has offered the loan at a rate of 51% with a review, and the cost of the has increased to 126,000 due to new auditing standards requirements indicate whether under should keep its existing loan accept the offer from First Capital Bank or accept the offer from Green Bad Blank Begin by calculating the annual costs under each loan agreement (Complete all input fields Enter for any zero balances) Costel CPA Amul Loan Lender Services Annual interest Co Existing loan ( NCPA service) First Capital Bank CPA Review service) Green Black Bank CPA Audit Service) Indicate whether under should keep its existing loan accept the offer from First Capital Bank or compt the offer from Green Back Bank Based on the analysis in the preceding step. Dunder should Requirement d. Discussy Dunder my desire to have an audit ignoring the potential reduction in interest costs Dunder my desire to have an audit because Requiremente. Eshwa a banking and is certainly the best sky bank to have a loan with a financial audiendude the company from being selected for a tax audit of the many other benefits that an audit provides (discovery of emes/raud suggestions of improved efficiencyleffectiveness, etc) Flest Capital Bank (CPA Review service) Green Back Bank (CPA Audit service) Indicate whether Dunder should keep its existing loan, accept the offer from First Capital Bank or accept the offer from Green Back Bank Based on the analysis in the preceding step. Dunder should Requirement c. Assume that First Capital Bank has offered the loan at a rate of 5.1% with a review, and the cost of the audit has increased to 512 standards requirements. Indicate whether Dunder should keep its existing loan, accept the offer from First Capital Bank, or accept the offer from G Begin by calculating the annual costs under each loan agreement (Complete all input fields Enter a "o for any zero balances) Cost of CPA Annual Loan Lender Services Annual Interest Cost Existing loan (No CPA service) First Capital Bank (CPA Review service) Green Back Bank (CPA Audit Service) Indicate whether Dunder should keep its existing loan accept the offer from First Capital Bank, or accept the offer from Green Back Bank Based on the analysis in the preceding step. Dunder should Requirement d. Discuss why Dunder may desire to have an audit ignoring the potential reduction in interest costs. Dunder may desire to have an audit because Requiremente. Explain how a strategic understanding of the client's business may increase the value of the audit service Possessing a strategic understanding of the client's business will help the auditor by enabling them to reduce the number of auditing steps and quantity of substantive testing required by the audit Identity risks that may affect whether the financial statements are fairly stated and ways to help the client improve operations to identity any and all fraud being committed throughout the organization er any number in the edited and then continue to the next

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