Five years ago, Ms. Halliday received a mortgage loan from the Scotiabank for $60,000 at 7.8% compounded semiannually for a five-year term. Monthly payments were based on a 25-year amortization. The bank is agreeable to renewing the loan for another five-year term at 6.8% compounded semiannually. Calculate the principal reduction that will occur in the second five-year term if:
a. The payments are recalculated based on the new interest rate and a continuation of the original 25-year amortization.
b. Ms. Halliday continues to make the same payments as she made for the first five years (resulting in a reduction of the amortization period).