1. A mortgage calls for monthly payments of $887.96 for 25 years. If the loan was for $135,000, calculate the semiannually compounded nominal rate of interest on the loan. (Round your answer to two decimal places.)

2. The interest rate for the first five years of a $95,000 mortgage is 7.2% compounded semiannually. Monthly payments are based on a 25-year amortization. Suppose a $3,000 prepayment is made at the end of the third year. What will be the principal balance at the end of the five-year term? (Round your answer to the nearest cent.)