1. Fingers Crossed Capital has arranged a variable rate loan from Stingy Bank.  The loan amount is $1,000,000, due in 5 years, and payments based on a 25-year amortization?The interest rate will be set at 200 basis points over the WSJ Prime Rate.  
2. Assume the WSJ Prime rate is 4% in year 1 and 5% in year 2:
   1. 1) What will the payment be in year 1?
   2. 2) What will the loan balance be at the end of year 1?
   3. 3) What will be the payment in year 2?
   4. 4) What will the loan balance be at the end of year 2?

Answer rating: 100% (QA)

Answer 1 The payment in year 1 is calculated using the loan amount the interest r... View the full answer