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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.

No excel solution please

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