Mr. Smith borrows $8,000 from a bank that charges interest at 6% compounded monthly. Mr. Smith has to pay the money back with six equal payments. However, the first payment is to be made immediately on receipt of the $8000. Successive payments are spcaed six-months part; that is, the loan repayments are made semi-annually.

a) Determine the size of the equal semi-annual payment.

b) At the time of the fourth payment, suppose Mr. Smith decides to pay off the loan with one lump sum payment. How much should be paid? Include the fourth payment.