An ARM is made for $50,000 for 30 years with the following terms:

Initial interest rate = 1 percent Index = 1-year Treasuries

Payments reset each year Margin = 200 basis points

Interest rate cap = none Payment cap = none

Discount points = 1 point

Negative amortization is not allowed

Based on estimated forward rates, the 1-year Treasury yields to which the ARM is tied is forecasted as follows:

Beginning of year (BOY) 2 = one percent (1%); (BOY) 3 = two percent (2%); (BOY) 4 = 3.5%; (BOY) 5 = 5%

Compute the interest rate, monthly payments, and loan balances for each year for this unrestricted ARM, and the yield for the entire five-year period.