A mortgage originator has recently decided to pool 2,000 of its mortgages into a portfolio. The average value of each mortgage in the pool is $250,000, and the average interest rate is 4.80%. The mortgage originator plans to sell the mortgages to an investment bank, but it will continue to service the mortgages for a small fee (0.50% per year). The cash flows from the assets will be allocated to tranches. The investment bank plans to create a mortgage-backed security with only three tranches: a senior tranche, a mezzanine tranche, and an equity tranche. The principal from the portfolio of mortgages will be allocated as follows: 70% will go to the senior tranche (rated 'AAA' and earning 2.75%), 20% will go to the mezzanine tranche (rated 'A' and earning 3.75%), and the remainder will go to the equity tranche (rated 'CCC'). The investment bank plans to keep 0.80% per year as its share for the administration of the securitization process.

	This information is summarized in the tables below.
	Number of mortgages		2,000
	Average mortgage value		$250,000
	Average interest rate		4.80%
	Mortgage originator fee		0.50%
	Investment bank fee		0.80%
			MBS Principal Allocation	Rate
	Senior tranche		70.00%	2.75%
	Mezzanine tranche		20.00%	3.75%
	Equity tranche		10.00%

What is the total value of the mortgage pool being sold to the investment bank?
What is the total annual interest expense paid by the borrowers (those who took out mortgages to buy their homes)?