I need the answer to question b. I attached a photo of the solution, but what I don't understand is how to calculate the floating-rate (liability)

Problem 1 Weight 40 points Five years ago, NORBank offered a 30 year fixed-rate mortgage to Sandy Olsson on the following terms, which she accepted: Loan amount of NOK 5 milllion at 3% annual interest, monthly (ordinary annuity) payments, and 80% amortization at the end of the 30-year term. Today, after five years into the maturity-term, expectations of inflation warrant a 5% interest rate on mortgages similar to the one accepted by Sandy. Five years ago, NORBank funded Sandy's NOK 5 million loan by issuing a NOK 5 million, 5-year note at 2% percent interest per year. Today, NORBank has to pay an annual rate of 4% on similar notes. Please answer questions (a) and (b) below: (a) 20 pts. After five years, is the value of NOR Bank's loan affected at all by change in inflation? (1) 20 pts. NORBank's choice regarding the maturity of assets and liabilities expose the value of the bank's equity to considerable risk as general economic activity changes over time. Explain why, or why not, you agree with the statement. (b) Yes, duration-mismatch of assets and liabilities caused by the lending long, borrowing short practice makes NORBank significantly exposed to inflation. Rates on short-term liabilites will then increase, while payments on the fixed-rate mortgage remain level - and may eventually wipe out the NORBank's positive spread. The cash flow effect of the change in inflation is illustrated below: Monthly cash flow Mortgage loan (asset) Floating-rate (liability) Monthly cash flow 19,364 Mortgage loan (asset) 19,364 8,333 Floating-rate (liability) 16,667 Interest margin 11,031 Interest margin 2,697 equivalent to a drop in the interest margin of 76% due to the incrase in inflation and thus the higher nominal rate of interest of 5% from initially 3%. Problem 1 Weight 40 points Five years ago, NORBank offered a 30 year fixed-rate mortgage to Sandy Olsson on the following terms, which she accepted: Loan amount of NOK 5 milllion at 3% annual interest, monthly (ordinary annuity) payments, and 80% amortization at the end of the 30-year term. Today, after five years into the maturity-term, expectations of inflation warrant a 5% interest rate on mortgages similar to the one accepted by Sandy. Five years ago, NORBank funded Sandy's NOK 5 million loan by issuing a NOK 5 million, 5-year note at 2% percent interest per year. Today, NORBank has to pay an annual rate of 4% on similar notes. Please answer questions (a) and (b) below: (a) 20 pts. After five years, is the value of NOR Bank's loan affected at all by change in inflation? (1) 20 pts. NORBank's choice regarding the maturity of assets and liabilities expose the value of the bank's equity to considerable risk as general economic activity changes over time. Explain why, or why not, you agree with the statement. (b) Yes, duration-mismatch of assets and liabilities caused by the lending long, borrowing short practice makes NORBank significantly exposed to inflation. Rates on short-term liabilites will then increase, while payments on the fixed-rate mortgage remain level - and may eventually wipe out the NORBank's positive spread. The cash flow effect of the change in inflation is illustrated below: Monthly cash flow Mortgage loan (asset) Floating-rate (liability) Monthly cash flow 19,364 Mortgage loan (asset) 19,364 8,333 Floating-rate (liability) 16,667 Interest margin 11,031 Interest margin 2,697 equivalent to a drop in the interest margin of 76% due to the incrase in inflation and thus the higher nominal rate of interest of 5% from initially 3%