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5. Consider a loan with the following terms for an ARM: Loan Amount = $150,000 Starting Rate = 5% Term = 30 Years - Adjustment
5. Consider a loan with the following terms for an ARM: Loan Amount = $150,000 Starting Rate = 5% Term = 30 Years - Adjustment Interval = 1 Year Payment Cap = 6% a. What is the initial monthly payment? b. What is the loan balance at the end of year 1? c. Suppose the new composite rate at the beginning of year 2 is 8%. What is the new monthly payment at the beginning of year 2? HINT: read the above information carefully
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