You wish to obtain a 20 year, $120,000 mortgage from the Banco Popular and are offered a stated rate of 7% per year compounded monthly. Monthly payments start one month from now.

a) Determine your monthly payment.

b) Ten years from now (immediately after you have made your 120th payment) you have the opportunity to refinance the remaining 10 years of the mortgage at a stated rate of 5%/year compounded semi-annually. Assuming you decide to refinance, what will be your new monthly payments.