An ARM is made for $200,000 for 30 years with the following terms:
Initial interest rate = 3%
Index = 1-year Treasuries
Payments reset each year
Margin = 2 percent
Fully amortizing
Estimated forward rates:
BOY 2	4.50%
BOY 3	5.25%
BOY 4	6%
BOY 5	6.50%
Compute payments and balances for each of the years 1-5.