A $ 200 000 loan is made with 30 years maturity and monthly compounded. The loan is based on a teasing rate of 2% and the market rate is 6%. The difference will be added to loan balance after 1 year and reset date is 1year. After that, the new pay rate is 7%. a)What is the PMT in year 1? What is the loan balance at the end of year 1 ? b) What is the PMT in year 2? What is the loan balance at the end of year 2?

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