James borrowed $150,000 to refit his fishing trawler. The loan requires monthly repayments over 10 years. When he borrowed the money the interest rate was 11.5% per annum, but 18 months later the bank increased the interest rate to 13% per annum, in line with market rates. The bank tells James he can increase his monthly repayment (so as to pay off the loan by the originally agreed date) or he can extend the term of loan (and keep making the same monthly repayment). Calculate:

a. (4 marks) The new monthly repayment if James accepts the first option.

b. (2 marks) The extra period added to the loan term if James accepts the second option

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