The Berezins agreed to monthly payments rounded up to the nearest $100 on a mortgage of $36 000 amortized over 10 years. Interest for the first 5 years was 8.75% compounded semi-annually. After 30 months, as permitted by the mortgage agreement, the Berezins increased the rounded monthly payment by 10%.
(a) Determine the mortgage balance at the end of the 5-year term.
(b) If the interest rate remains unchanged over the remaining term, how many more of the increased payments will amortize the mortgage balance?
(c) How much did the Berezins save by exercising the increase-in-payment option?