A reset mortgage allows for one interest rate reset during the life of the loan. The mortgage rate will be reset after 5 years, to fully amortize at the end of the original 30 year period (i.e. after 25 more years). For a 6 5/8%, $120,000, mortgage, compute the reset payment if the new rate resets to 9%. (Hint: calculate how much balance you have after you pay for 5 years at the rate of 6.625%, then use the balance as the new PV). Assuming monthly compounding.

a. 936.89

b. 944.04

c. 952.63

d. 966.51