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Assume that a lender offers a 3 0 - year, $ 1 4 4 , 0 0 0 adjustable rate mortgage ( ARM ) with

Assume that a lender offers a 30-year, $144,000 adjustable rate mortgage (ARM) with the following terms:
Initial interest rate =7.5 percent
Index = one-year Treasuries
Payments reset each year
Margin =2 percent
Interest rate cap =1 percent annually; 3 percent lifetime
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=8.5 percent; (BOY)4=9.5 percent; (BOY)5=11 percent.
Required:
a. Compute the payments and loan balances for the ARM for the five-year period.
b. Compute the payments and loan balances for the ARM for the five-year period.
Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar.Compute the yield for the ARM for the five-year period.
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