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

$$142,000,30-$year fully amortizing ARM with the following terms:

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

Based on estimated forward rates, the index to which the ARM is tied is

forecasted as follows: Beginning of year $($BOY$)2=7$ percent; $($BOY$)3=$

$8\mathrm{.}5$ percent; $($BOY$)4=9\mathrm{.}5$ 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.

Required A

Required B

Compute the payments and loan balances for the unre

Note: Do not round intermediate calculations. Round y

$\backslash$table$[[,$Payments,Loan Balance$],[$Year $1,,],[$Year $2,,],[$Year $3,,],[$Year $4,,],[$Year $5,,]]$ Required A

Compute the yield for the unrestricted ARM for the five$-$year period.

Note: Do not round intermediate calculations. Round your final answer to

Yield

$\%$