A $130,000 mortgage loan at 7.2% compounded monthly has a 25-year amortization.
a. What prepayment at the end of the first year will reduce the time required to pay off the loan by one year? (Assume the final payment equals the others.)
b. Instead of the prepayment in Part (a), what prepayment at the end of the tenth year will reduce the time required to pay off the loan by one year?