The vendor of a residential property accepted a $40,000 take-back mortgage to facilitate the sale. The agreement

Question:

The vendor of a residential property accepted a $40,000 take-back mortgage to facilitate the sale. The agreement calls for quarterly payments to amortize the loan over 10 years at an interest rate of 7% compounded semiannually. What was the cash value (or fair market value) of the mortgage at the time of the sale if the market interest rate on 10-year term mortgages was
a. 10.5% compounded semiannually?
b. 9% compounded semiannually?