A) Consider a fixed-rate, constant payment 6-year mortgage with annual payments. The interest rate is 8.5% per annum and the principal (or loan) amount is $7,575.

What is the annual payment to amortise the loan?

B) How much of that payment is for interest and how much is for principal in year 1? Show the calculation how you get the answer.

C) What is the loan balance at the end of year 2? Show the calculation how you get the answer.