Question: Suppose a bank enters into an agreement to make a- $10 million, three-year floating-rate loan to one of its best corporate customers at an initial rate of 8 percept The bank and its customer agree to a cap and a floor arrangement in which the customer reimburses the bank if the floating loan rate drops below 6 per-cent and the bank reimburses the customer if the floating loan rate rises above 10 percent Suppose that at the beginning of the loan% second year, the floating loan rate drops to 5 percent for a year and then, at the beginning of the third year, the loan rate increases to 12 percent for the year. What rebates must each party to the agreement pay?