, you can use $170,000 as the outstanding balance.

(b) How many more $1650 monthly payments are required to fully pay off the mortgage at the rate of interest that is in effect at this time? What would be the size of the drop payment needed one month later to fully pay off the mortgage? (3 + 1 = 4 marks)

(c) Since Sam and Ella are wishing to refinance their mortgage before the end of the current 5 year locked in period, the mortgage company will charge them a penalty. The penalty is equal to 3 times one months interest on the current outstanding balance. What is the size of the penalty? (1 mark)

(d) Calculate what the mortgage interest rate, j2, has to drop to in order for it to be beneficial for Sam and Ella to refinance. Make sure you take into consideration the penalty. Assume that Sam and Ella will continue making monthly payments of $1650. For the term remaining, use you answer to (b), rounded to the nearest month. (4 marks)