Given data:A mortgage of $600,000 is to be amortized by end-of-month payments over a 25-year period.The interest rate on the mortgage is 5% compounded semi-annually.Calculate the principal portion of the 31st payment.As we know that the amount of payment that goes towards the repayment of the principal is known as Principal payment.So, the formula to calculate Principal payment is:Principal payment = Monthly Payment - Interest paymentFirst, we have to calculate the monthly payment.To calculate the monthly payment, we use the below formula:Where:r = rate of interest/12 = (5/100)/12 = 0.0041666666666667n = number of payments = 25 x 12 = 300P = Principal = $600,000Putting all these values in the formula, we get;`Monthly Payment = P × r × (1 + r)n/((1 + r)n - 1)`=`600000 × 0.0041666666666667 × (1 + 0.0041666666666667)300/((1 + 0.0041666666666667)300 - 1)`=`$3,316.01`Therefore, the Monthly Payment is $3,316.01.Now we will calculate the Interest Payment.To calculate the Interest Payment, we use the below formula:I = P × rI = Interest paymentP = Principal = $600,000r = rate of interest/12 = (5/100)/12 = 0.0041666666666667Putting the values in the formula, we get;I = $600,000 × 0.0041666666666667I = $2,500Therefore, the Interest Payment is $2,500.Now, we can calculate the Principal Payment.Principal payment = Monthly Payment - Interest payment=`$3,316.01 - $2,500 = $816.01`Therefore, the Principal Portion of the 31st payment is $816.01. Calculate the interest portion of the 14th payment.To calculate the interest portion of the 14th payment, we have to follow the below steps:The interest rate is compounded semi-annually.So, the rate of interest will be half the annual interest rate and the period will be doubled (in months) for each payment as the payments are to be made at the end of each month.So, the rate of interest for each payment will be:5% per annum compounded semi-annually will be 2.5% per half-year. So, the rate of interest per payment would be;Rate of interest (r) = 2.5%/2 = 1.25% p.m.Now, we will calculate the Interest Payment.To calculate the Interest Payment, we use the below formula:I = P × rI = Interest paymentP = Principal = $600,000r = rate of interest/12 = 1.25%/100 = 0.0125Putting the values in the formula, we get;I = $600,000 × 0.0125 × (1 + 0.0125)^(2 × 14) / [(1 + 0.0125)^(2 × 14) - 1]I = $3,089.25Therefore, the interest portion of the 14th payment is $3,089.25.Calculate the total interest in payments 72 to 85 inclusive.To calculate the total interest in payments 72 to 85 inclusive, we have to follow the below steps:The interest rate is compounded semi-annually.So, the rate of interest will be half the annual interest rate and the period will be doubled (in months) for each payment as the payments are to be made at the end of each month.So, the rate of interest for each payment will be:5% per annum compounded semi-annually will be 2.5% per half-year. So, the rate of interest per payment would be;Rate of interest (r) = 2.5%/2 = 1.25% p.m.Now, we will calculate the Interest Payment.To calculate the Interest Payment, we use the below formula:I = P × rI = Interest paymentP = Principal = $600,000r = rate of interest/12 = 1.25%/100 = 0.0125So, for 72nd payment, the interest will be:I = $600,000 × 0.0125 × (1 + 0.0125)^(2 × 72) / [(1 + 0.0125)^(2 × 72) - 1]I = $3,387.55So, for 73rd payment, the interest will be:I = $600,000 × 0.0125 × (1 + 0.0125)^(2 × 73) / [(1 + 0.0125)^(2 × 73) - 1]I = $3,372.78And so on...So, for the 85th payment, the interest will be:I = $600,000 × 0.0125 × (1 + 0.0125)^(2 × 85) / [(1 + 0.0125)^(2 × 85) - 1]I = $3,220.03Total interest = I₇₂ + I₇₃ + ... + I₈₅= $3,387.55 + $3,372.78 + .... + $3,220.03= $283,167.95Therefore, the total interest in payments 72 to 85 inclusive is $283,167.95.How much will the principal be reduced by payments in the third year?Total number of payments = 25 × 12 = 300 paymentsNumber of payments in the third year = 12 × 3 = 36 paymentsWe know that for a loan with equal payments, the principal payment increases and interest payment decreases with each payment. So, the interest and principal payment will not be same for all payments.So, we will calculate the remaining principal balance for the last payment in the 3rd year using the amortization formula. We will assume the payments to be made at the end of the month.The amortization formula is:Remaining Balance = P × [(1 + r)n - (1 + r)p] / [(1 + r)n - 1]Where:P = Principal = $600,000r = rate of interest per payment = 1.25%/2 = 0.00625n = Total number of payments = 300p = Number of payments made = 36Putting the values in the formula, we get;`Remaining Balance = 600000 * [(1 + 0.00625)^300 - (1 + 0.00625)^36] / [(1 + 0.00625)^300 - 1]`=`$547,121.09`Therefore, the principal will be reduced by payments in the third year is;$600,000 - $547,121.09= $52,878.91Hence, Blank #1 will be `A`, Blank #2 will be `4`, Blank #3 will be `A` and Blank #4 will be `M`.