An ARM is made for $150,000 for 30 years with the following terms:

Initial interest rate = 7%

Index = 1-year Treasuries

Payments reset each year Margin = 2%

Interest rate cap = None

Payment Cap = 5% increase in any year

Discount points = 2%

Fully amortizing; however, negative amortization allowed if payment cap reached based on estimated forward rates, the index to which the ARM is tied is forecasted as follows:

Beginning of year (BOY) 2 = 7%; (BOY)3 = 8.5%; (BOY)4 = 9.5%; (BOY)5 = 11% Compute the payments, loan balances, and yield for the ARM for the five-year period.