Keiko has a mortgage for $869,838.00. The term of the mortgage is 5 years, and the amortization period is 20 years. Keiko will make monthly payments and the mortgage rate is r(1) = 5.000%. After 4 years, the interest rate drops to 4.000% compounded annually, and she decides to refinance her loan. In order to refinance, she has to pay a penalty of 3 months' interest (based on the original interest rate), which is added to the outstanding balance on the new mortgage.