In order to invest in a small inn in Val Mstair (CH, GR), an investor contracts a CHF 5.6M ARM with 30-year monthly payments and annual interest rate adjustments.

The teaser rate (1st year only) is 2%. Annual cap is 3%, and lifetime cap is 5.8%. The index for the loan is the LIBOR, and the loan has a margin of 180 basis points.

It is expected that the LIBOR will increase by 1.8% on the second year (at the end of Year-1), and by another 1.2% on the third year (at the end of Year-2).

Current Yield on Libor is 3.15%. The loan is prepaid in 3 years.

-Assume the initiatial costs of 1.5 point (for loan issuance), and there is a 2.5% prepayment penalty.

1) PV after borrowing cost adjustments

2) 3rd year Balance after pre-payment penalty adjustment

3) EBC (assuming pre-payment after 3 years)

In order to invest in a small inn in Val Mastair (CH. GR), anator contracts a CHP 5.6M ARM with 30-year monthly payments and annual interest rate adjustments The tener rate (lat year only) i 2. Annual cap i 3%, and lifetime capi5.8%. The index for the loan in the LIBOR, and the town has a margin of 190 haal points It is expected that the LIBOR will increase by 1.9 on the second year at the end of Year 1), and by another 1.2 on the third year (at the end of Year 2) Current Yield on Liberia 3.16%. The loan is paid in 3 year REG INDEX ARM Annual Schedule Year 1 2 MARGIN RATE CONTRACT RATE NPER PMT END Asume the initiatial costs of 1. polat (for loan imance, and there is a 1.8% prepayment penalty. Vatter borrowing cost adjustment and year Balance sher prepayment penalty adjustment 000 FHC assuming pre-payment after a year) In order to invest in a small inn in Val Mastair (CH. GR), anator contracts a CHP 5.6M ARM with 30-year monthly payments and annual interest rate adjustments The tener rate (lat year only) i 2. Annual cap i 3%, and lifetime capi5.8%. The index for the loan in the LIBOR, and the town has a margin of 190 haal points It is expected that the LIBOR will increase by 1.9 on the second year at the end of Year 1), and by another 1.2 on the third year (at the end of Year 2) Current Yield on Liberia 3.16%. The loan is paid in 3 year REG INDEX ARM Annual Schedule Year 1 2 MARGIN RATE CONTRACT RATE NPER PMT END Asume the initiatial costs of 1. polat (for loan imance, and there is a 1.8% prepayment penalty. Vatter borrowing cost adjustment and year Balance sher prepayment penalty adjustment 000 FHC assuming pre-payment after a year) In order to invest in a small inn in Val Mastair (CH. GR), anator contracts a CHP 5.6M ARM with 30-year monthly payments and annual interest rate adjustments The tener rate (lat year only) i 2. Annual cap i 3%, and lifetime capi5.8%. The index for the loan in the LIBOR, and the town has a margin of 190 haal points It is expected that the LIBOR will increase by 1.9 on the second year at the end of Year 1), and by another 1.2 on the third year (at the end of Year 2) Current Yield on Liberia 3.16%. The loan is paid in 3 year REG INDEX ARM Annual Schedule Year 1 2 MARGIN RATE CONTRACT RATE NPER PMT END Asume the initiatial costs of 1. polat (for loan imance, and there is a 1.8% prepayment penalty. Vatter borrowing cost adjustment and year Balance sher prepayment penalty adjustment 000 FHC assuming pre-payment after a year) In order to invest in a small inn in Val Mastair (CH. GR), anator contracts a CHP 5.6M ARM with 30-year monthly payments and annual interest rate adjustments The tener rate (lat year only) i 2. Annual cap i 3%, and lifetime capi5.8%. The index for the loan in the LIBOR, and the town has a margin of 190 haal points It is expected that the LIBOR will increase by 1.9 on the second year at the end of Year 1), and by another 1.2 on the third year (at the end of Year 2) Current Yield on Liberia 3.16%. The loan is paid in 3 year REG INDEX ARM Annual Schedule Year 1 2 MARGIN RATE CONTRACT RATE NPER PMT END Asume the initiatial costs of 1. polat (for loan imance, and there is a 1.8% prepayment penalty. Vatter borrowing cost adjustment and year Balance sher prepayment penalty adjustment 000 FHC assuming pre-payment after a year)