please use formula not Excel.

10. Bob got a 30 year Fully Amortizing FRM for $2,500,000 at 4%, except with non-constant payments. For the first 2 years Bob will pay $1,250 per month. The loan will become a fully amortizing mortgage after 2 years. What will be the balance on this mortgage after 2 years?

(hint: see the option ARM slide in the ARM lecture)

11. Tom got a 30 year fully amortizing FRM for $200,000 at 6%, with constant monthly payments. After 3 years of payments rates fall and he can get a 27 year FRM at 5%, but he must pay 2 points and $1000 in closing costs to get the new loan. Think of the refinancing decision as an investment for Tom, he pays a fee now but saves money in the future in the form of lower payments. What is the annualized IRR of refinancing for Tom assuming he stays until maturity?