. . 21. You are considering an adjustable rate mortgage loan with the following characteristics: Loan amount: $300,000 Term: 20 years Index: one year T-Bill Margin: 2.5% Periodic cap: 2% Lifetime cap: 5% Negative amortization: not allowed Financing costs: $3,500 in origination fees and 1 discount point . . . Suppose the Treasury bill yield is 3.5% at the outset and is then moves to 4.5% at the beginning of the second year and to 8.5% at the beginning of the third year. a) Build a table that shows the contract rate, monthly payment, and the end-of-year balance for years 1-3. b) If you pay off the loan at the end of the third year, what is your effective borrowing cost? (Don't forget about the financing costs). . . 21. You are considering an adjustable rate mortgage loan with the following characteristics: Loan amount: $300,000 Term: 20 years Index: one year T-Bill Margin: 2.5% Periodic cap: 2% Lifetime cap: 5% Negative amortization: not allowed Financing costs: $3,500 in origination fees and 1 discount point . . . Suppose the Treasury bill yield is 3.5% at the outset and is then moves to 4.5% at the beginning of the second year and to 8.5% at the beginning of the third year. a) Build a table that shows the contract rate, monthly payment, and the end-of-year balance for years 1-3. b) If you pay off the loan at the end of the third year, what is your effective borrowing cost? (Don't forget about the financing costs)