The MacLellans originally chose to make payments of $1600 per month on a $138,000 mortgage written at 7.4% compounded semiannually for the first five years. After three years they exercised their right under the mortgage contract to increase the payments by 10%.
a. If the interest rate does not change, when will they extinguish the mortgage debt?
b. What will be the principal balance at the end of the five-year term?