Question 1 Sam obtained an adjustable rate mortgage (ARM) loan of $2 million for 20 years from a bank to purchase an apartment at Yuen Long two years ago. The mortgage interest rate was "Prime rate (P) minus 1%. However, in the first two years, Sam could (and did) make monthly "interest-only payment". Since the loan origination, the P did not change and remained at 4% in the last two years. However, payments after two years will be adjusted to fully amortize the loan at maturity a) Calculate the monthly payment for the first two years. b) Calculate loan balance at the end of Year 2. c) If the prime rate increased to 5% at the end of Year 2, the interest rate would be reset at the start of Year 3. Calculate Sam's new monthly payment and the percentage rise in his monthly payment