Consider the following information and answer each of the questions below using arithmetic, algebra, and Excel functions as appropriate. Lary is considering an ARM loan offered by a local lender. The loan amount is $385,000. The term of the loan is 10 years. The index today is 1.1%. The margin on the loan is 3%. The teaser (first year only) is 1%. The composite rate adjusts annually and is subject to annual and lifetime caps of 2% and 5%. The loan does not provide for negative amortization nor does it provide floors. Assume the following forecast of index rates. The prevailing rate in the market for similar FRM loans is 5.25%. Make no changes to this Excel workbook other than entering information needed in the yellow and pink highlighted cells and your answer calculation in the green highlighted cells. Only the green highlighted cells will be graded. Do not round intermediate calculations (let Excel store all decimal values). Year 0 1 2 3 4 S 6 Index Rate Composite Forecast Rate 1.10% 2.25% 2.50% 3.10% 4.00% 7.50% 5.50% 7.50% 8.00% 4.10% 1 2 3 4 S 7 8 9 21. Bulld an emertiration schedule for the loan in this assignment and select the data needed for the two charts below (charts are hand graded for 10 points) (Be sure to include legends and titles in your charts) Month Payment Interest Principal Balance 0 1 2 3 4 5 6 7 8 9 3 10 1 11 5 12 16 13 17 14 18 15 19 16 10 17 11 IS 12 19 13 20 21 15 22 16 23 17 24 18 25 -19 26 20 27 28 29 30 31 32 Consider the following information and answer each of the questions below using arithmetic, algebra, and Excel functions as appropriate. Lary is considering an ARM loan offered by a local lender. The loan amount is $385,000. The term of the loan is 10 years. The index today is 1.1%. The margin on the loan is 3%. The teaser (first year only) is 1%. The composite rate adjusts annually and is subject to annual and lifetime caps of 2% and 5%. The loan does not provide for negative amortization nor does it provide floors. Assume the following forecast of index rates. The prevailing rate in the market for similar FRM loans is 5.25%. Make no changes to this Excel workbook other than entering information needed in the yellow and pink highlighted cells and your answer calculation in the green highlighted cells. Only the green highlighted cells will be graded. Do not round intermediate calculations (let Excel store all decimal values). Year 0 1 2 3 4 S 6 Index Rate Composite Forecast Rate 1.10% 2.25% 2.50% 3.10% 4.00% 7.50% 5.50% 7.50% 8.00% 4.10% 1 2 3 4 S 7 8 9 21. Bulld an emertiration schedule for the loan in this assignment and select the data needed for the two charts below (charts are hand graded for 10 points) (Be sure to include legends and titles in your charts) Month Payment Interest Principal Balance 0 1 2 3 4 5 6 7 8 9 3 10 1 11 5 12 16 13 17 14 18 15 19 16 10 17 11 IS 12 19 13 20 21 15 22 16 23 17 24 18 25 -19 26 20 27 28 29 30 31 32
