Assume you are interested in a 3/1 interest-only ARM that has monthly payments and a 30-year term. The initial contract rate is 3.00% and the contract rate for year 4 is 5.00%. The lender charges three discount points. The loan amount is $600,000.

Please show : What is the monthly payment in year 1, and iff the loan is prepaid at the end of year 3, what is the effective interest rate, and If the loan is prepaid at the end of year 4, what is the effective interest rate?

Please show your work thanks.