1. In what year(s) are the caps triggered?

2. What is the loan balance at the end of year (EOY) 3?

3. What is the percentage change in monthly payment from year 1 to year 5 [percentage change = (difference between first payment and final payment) / (first payment)]?

4. What is the monthly payment going to be during year 2?

Part 2 - Adjustable Rate Mortgage (ARM) Fill out the following table based on the assumptions below. Identify if and in which years the caps are violated. ASSUME THE INTEREST ADJUSTS EVERY YEAR. Assumptions Loan Amount Term Margin Monthly Compounding $250,000 25 2.50% Caps Periodio Overall 1.25% 375% 2 3 4 5 Year Index Teaser Rate Interest Rate Loan Balance (EoY) Monthly Payment 1.00% 275% 1.50% 3.00% 3.50% 4.50% our answer is a percentage then without signs % and rounded to the nearest hundred. For example if the answer is