Suppose that a bank has $5 billion of one-year loans and $30 billion of five-year loans. These are financed by $25 billion of one-year deposits and...

Suppose that a bank has $5 billion of one-year loans and $30 billion of five-year loans. These are financed by $25 billion of one-year deposits and $10 billion of five –year deposits. Explain the impact on the bank’s net interest income of interest rates increasing by 2% every year for the next three years.