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. Sam takes out a 30-year mortgage for $175,000 at an annual effective rate of 9%. Sam pays off the loan with level annual payments.
. Sam takes out a 30-year mortgage for $175,000 at an annual effective rate of 9%. Sam pays off the loan with level annual payments. At the end of 6 years, interest rates have dropped to 5% annual effective. Sam decides to refinance his existing loan while borrowing an additional 6,000 for a home-improvement project. The term of the loan remains the same (24 payments are remaining).
a) Find the amount of his new annual payment.
b) Explain your reasoning in words.
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