Electric power consumption has been increasing uninterruptedly across the globe, this increase specially accelerated in the last decade. Consequently, existing transmission lines are becoming overloaded beyond their power transfer capability. The inadequacy of the transmission lines has contributed to power interruptions and instability of the power system. Construction of new transmission lines can be a solution to mitigate these problems. However, to build the whole structure of a new transmission line, a huge investment is required. Besides this, environmental concerns would create further barriers that delay the accomplishment of the project. Therefore, the effective and quickest solution to tackle this problem is enhancing the power transfer capability and stability margin of existing transmission lines. This thesis presents the method to convert an existing HVAC line into a simultaneous AC-DC power transmission system to enhance power transfer capability as well as to improve power system stability. Using the method, the loadability of Tana Beles to Addis Ababa 400kV AC line has increased to more than double which is from 1091.66MW to 2196.85MW. The dynamic performances of the existing HVAC and simultaneous AC-DC transmission lines during transient states are also analyzed through three-phase to ground fault applied on the transmission line. In PSCAD/EMTDC software simulations, it is shown that the stability of the system can be effectively improved by simultaneous AC-DC power transmission with fast DC power modulation. The stabilities of the rotor speed and load angle of the generator are improved by 80% and 88% respectively. Other stability indicator parameters are also improved significantly. From the economic point of view, rather than constructing new HVAC line, converting existing HVAC line to simultaneous AC-DC transmission system has a price reduction of about 107,984,968.56USD or 32.46% of the new HVAC line cost. Considering a 35-years project life cost analysis, it is observed that the life cycle cost of the simultaneous AC-DC transmission system is about 29.2% lower than the life cycle cost of a new 400 kV HVAC line. Thus, the designed simultaneous AC-DC power transmission system has better technical performance and also less costly than constructing a new HVAC line.