Michael Smith was in trouble: He was unemployed and living on his monthly disability

pay of $1,200. His credit card debts of $19,000 were threatening to overwhelm this puny

income. Every month in which he delayed paying the credit card debt cost him 1.5% on

the remaining balance. His only asset was his house, on which he had a $67,000 mortgage.

Then Michael got a phone call from Uranus Financial Corporation: The company offered

to refinance Michaels mortgage. The Uranus representative explained to Michael that,

with the rise in real-estate values, Michaels house could now be remortgaged for

$90,000. This amount would allow Michael to repay his credit card debts and even leave

him with some money. Here are some additional facts:

The new mortgage would be for 25 years and would have an annual interest rate of

9.23%. The mortgage would be repayable in equal monthly payments over this term, at a

monthly interest rate of 9.23% / 12 = 0.76917%. The fees on the mortgage are $8,000.

There are no penalties involved in repaying the $67,000 existing mortgage.

Answer the following questions:

a. What will Michaels monthly payments be on the new mortgage? ($769.50)

b. After repaying his credit card debts, how much money will Michael have left? (-4000)

c. What is the effective annual interest rate (EAIR) on the Uranus mortgage? (10.93%)

Show A-C, in excel computations/formulas to get the correct anwsers listed in parenthesis.