EXTERNAL INFORMATION Economic Information General inflation has averaged 3.0% annually for the last 20 years and is expected to continue at 3%. They live in a community property state. Bank Lending Rates . 15-year conforming annual rate mortgages are 3.25%. 30-year conforming rate mortgages are 3.75%. Any closing costs associated with mortgage refinance are an additional 3% of the amount mortgaged and will be included in the mortgage. Investment Information They expect to have an 8.5% rate of return for education and 8.5% for retirement. INTERNAL INFORMATION The Residence The current value of the residence is $550,000. The balance of the 30-year mortgage at 5.5% is $260,514. The land value is $150,000. The monthly payment is $1,703.37 and they have owned it for 8 years. They will not qualify for refinancing until Mr. Young has been employed for 12 months. Exercise 2 - Debt Management and Short-Term Obligations Calculate the Following: 15-Year Mortgage Refinanced Monthly Payment Monthly Savings

Economic Information - General inflation has averaged 3.0% annually for the last 20 years and is expected to continue at 3%. - They live in a community property state. Bank Lending Rates - 15-year conforming annual rate mortgages are 3.25%. - 30-year conforming rate mortgages are 3.75%. - Any closing costs associated with mortgage refinance are an additional 3% of the amount mortgaged and will be included in the mortgage. Investment Information They expect to have an 8.5% rate of return for education and 8.5% for retirement. INTERNAL INFORMATION The Residence The current value of the residence is $550,000. The balance of the 30 -year mortgage at 5.5% is $260,514. The land value is $150,000. The monthly payment is $1,703.37 and they have owned it for 8 years. They will not qualify for refinancing until Mr. Young has been employed for 12 months. Economic Information - General inflation has averaged 3.0% annually for the last 20 years and is expected to continue at 3%. - They live in a community property state. Bank Lending Rates - 15-year conforming annual rate mortgages are 3.25%. - 30-year conforming rate mortgages are 3.75%. - Any closing costs associated with mortgage refinance are an additional 3% of the amount mortgaged and will be included in the mortgage. Investment Information They expect to have an 8.5% rate of return for education and 8.5% for retirement. INTERNAL INFORMATION The Residence The current value of the residence is $550,000. The balance of the 30 -year mortgage at 5.5% is $260,514. The land value is $150,000. The monthly payment is $1,703.37 and they have owned it for 8 years. They will not qualify for refinancing until Mr. Young has been employed for 12 months