A bank is in the process of renegotiating an amortizing $150 million loan that has two annual remaining payments. The agreement requires reducing the interest rates from the existing 7% to 5% and to extend the maturity from two to five years. A grace period of two years is offered during which time only interest will be paid. In the last three years, principal payments of $50 million are expected each year. An up-front fee of 1% will be collected as part of the renegotiating fee. a. If the cost of funds to the bank is 8% before rescheduling and 8.75% after rescheduling, what is the present value of the old and new loan? b. What should the approximate up-front fee in percent be in order for the bank to have the present value of the old and new loan be equal? c. At what costs of funds after rescheduling will the present value of the new and old loan be equal