1 Problem 5-6 10 points A borrower has been analyzing different adjustable rate mortgage (ARM) alternatives for the purchase of a property. The borrower anticipates owning the property for five years. The lender first offers a $147,000, 30-year fully amortizing ARM with the following terms: eBook Print Initial interest rate = 6 percent Index = 1-year Treasuries Payments reset each year Margin = 2 percent Interest rate cap = None Payment cap = None Negative amortization = Not allowed Discount points = 2 percent References (BOY)2 = 7 percent; Based on estimated forward rate the index to which the ARM is tied is forecasted as follows: Beginning of (BOY) 3 = 8.5 percent; (BOY) 4 = 9.5 percent; (BOY) 5 = 11 percent. Required: a. Compute the payments and loan balances for the unrestricted ARM for the five-year period. b. Compute the yield for the unrestricted ARM for the five-year period. Complete this question by entering your answers in the tabs below. Req A Req B