A lender agrees to fund the purchase of a new building. The mortgage amount is $1,200,000 fixed at 3.8% for ten years with a 30-year amortization, with monthly payments. There is a 5% pre-payment penalty for the first year, decreasing by one percent a year. If the borrower decided to pre-pay the mortgage at the end of the sixth year, please compute:

a. the amount of principal being repaid at that time

b. the amount of the pre-payment penalty