Question: The interest rate for the first three years of an $80,000 mortgage loan is 7.4% compounded semiannually. Monthly payments are calculated using a 25-year amortization.

The interest rate for the first three years of an $80,000 mortgage loan is 7.4% compounded semiannually. Monthly payments are calculated using a 25-year amortization.
a. What will be the principal balance at the end of the three-year term?
b. What will be the monthly payments if the loan is renewed at 6.8% compounded semiannually (and the original amortization period is continued)?

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