Compute the monthly payment she has to make in the first year. What is the loan balance remaining at the end of one year?

Use Excel in your calculations. May purchases a house for $2.5 million and makes a down payment of 40% of the purchase price. She borrows the rest from the bank on a 25-year loan, which charges her 1.2% for the first year and 1-year SIBOR + 0.35% thereafter.
The monthly payment of a variable-rate loan is calculated as if it is a fixed-rate loan on the outstanding loan balance and time remaining on the loan, whenever the variable rate is changed.
(a) Compute the monthly payment she has to make in the first year. What is the loan balance remaining at the end of one year? (8 marks)
(b) Calculate the monthly payment she has to make in the second year assuming the 1-year SIBOR is 1.7%. What is the loan balance remaining at the end of two years?
How much was the interest and principal repayment made at the end of two years? (8 marks)
(c) What is SIBOR? From your understanding of SIBOR, explain if the (mortgage) loan rate can ever be less than SIBOR?
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