Franco obtained a 30-year $100,000 floating rate mortgage with annual rate adjustments. The initial interest rate is 12%. However, because of Francos personal income, he and the lender negotiated and agreed to a $800 monthly mortgage loan payment.

5. Despite Francos agreement with the lender, what should the monthly mortgage loan payment be for the first year? Given the agreed upon monthly payment of $800, what will the mortgage loan balance be after five years if this were a fixed rate mortgage? After 30 years?

6. Assume that the all-in interest rate increase to 13% at the beginning of year 2. How much interest will be accrued (negative amortization) to the mortgage loan principal balance in the first year if the monthly mortgage loan payment remains at $800?