A couple purchased a home of a cost of $160,000. They have put a down payment of $55,000 and signed a mortgage contract for the difference to be paid in monthly installments over 25 years at a rate of 10.5%. The contract stipulates that after 5 years the mortgage will be renegotiated at the new prevailing rate of interest.

Find

a). Monthly payment for the initial 5-year period.

b). The outstanding principal after 5 years.

c). The new monthly payment after 5 years at the 9% rate.