Assume the following terms for an ARM loan:

$$ No Caps or limitations on PMT and interest rate

$$ Loan amount $$60000,30$ years monthly compounded.

$$ ARM interest adjusts annually

$$ The initial interest rate is $8\%$

$$ The margin $=2\%$

$$ The index after $1-$year Treasury takes the pattern $10,13,15,$ and $10$ percent for

the next $4$ years.

Construct a loan amortization schedule for the first $5$ years and show the adjusted

payments, loan balances, and expected yield be for an ARM?