A person purchased a house 10 years ago for $160,000. The house was financed by

paying 20% down and signing a 30-year mortgage at 7.75% on the unpaid balance with

payments made monthly.

a) What is the unpaid balance after the 120th payment?

b) After the 120th payment, the owner wishes to refinance the house due to a need for

additional cash. If the loan company agrees to a new 30-year mortgage of 80% of the

new appraised value of the house, which is $225,000, how much cash will the owner

receive after repaying the balance of the original mortgage?