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	2000
Average mortgage value	$250,000
Average interest rate	4.8%
Mortgage originator fee	0.5%
Investment bank fee	0.80%

From the payments obtained from the borrowers, fees are paid to the mortgage originator and the investment bank, and returns are provided to the MBS investors. Complete the table below, showing what the annual cash flow should be to each of the parties.

Mortgage originator
Investment bank
Senior tranche investors
Mezzanine tranche investors
Equity tranche investors

What is the MBS principal allocation to the equity tranche in dollar terms?

If the investment bank plans to keep the equity tranche for themselves, what annual return will be obtained on this investment?