Your local bank has offered you a 10-year, $100,000 mortgage with monthly payments. The bank is charging 1.5 points and processing costs of $750; both points and processing costs are deducted from the mortgage when it is given. Monthly payments on the mortgage are based on the 12% annual interest rate on the full amount of the mortgage (that is, $100,000). a. Calculate the monthly payment on the mortgage, show the amortization table, and compute the EAIR.

b. Will the EAIR of the mortgage change if the loan period is 6 years?

c. Compute the total interest paid in each of the years of the mortgage. You can base your answer on the amortization table or investigate the Excel function Cumipmt.