Gavin and Holly purchased a $585,000 condominium in Toronto. They paid 20% of the amount as a down payment and secured a 25-year mortage for the balance. They negotiated a fixed interest rate of 4.2% compounded semi-annually for a 5-year term with repayments made at the end of every month. Their mortgage contract also stated that they may prepay up to 15% of the original principal every year without at interest penalty. At the end of the first year, in addition to the regular monthly payment, they made a lump-sum payment of $17,000.

a. What was the size of the monthly payment?

b. What was the principal balance at the end of the first year, prior to make the lump sum payment?