(Mortgage + EAIR + processing fee) Your local bank has offered you a 20-year, $100,000 mortgage. The bank is charging 1.5 points, with “processing” costs of $750; both points and processing costs are deducted from the mortgage when it is given. The mortgage carries a 10% annual interest rate and is paid in 20 equal annual payments. Note that the annual payments on the mortgage are calculated on the full amount of the mortgage (that is,

$100,000).

a. Calculate the annual mortgage payment.

b. Calculate the EAIR.

c. Present an amortization table which shows the amount of effective interest you pay each year.