Complete/answer each of the following problems providing an Excel spreadsheet with the solution to receive full credit. For example, create the loan amortization table for each of the problems.

1- David Copperfield has been analyzing different adjustable rate mortgage (ARM) alternatives for the purchase of a home. David anticipates owning the property for 5 years.

The lender offers a $200,000, 30-year fully amortizing ARM with the following terms: Initial interest rate = 5% Index = 1-year treasuries Payments reset each year Margin = 2% Interest rate cap = None Payment cap = None Negative amortization = Not allowed Discount points = 2% Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows:

Beginning of the year (BOY) (BOY) 2 = 6% (BOY) 3 = 7.5% (BOY) 4 = 8.5% (BOY) 5 = 10% Compute the monthly payments, monthly loan balances, and yield for the unrestricted ARM for the five-year period (60 months).