1. Liberty Finance offers a 30-year adjustable rate mortgage loan for $250,000 with the following terms:

• Initial rate = 7.5%
• Index = one-year US Treasuries
• Payments reset every year, at the end of the year
• Margin = 2%
• Interest rate cap: 1% annual and 3% lifetime
• Discount Points = 2%
• Loan Type: Fully amortizing. Negative amortization is allowed.

Assume that the one-year US treasury rates are as follows: Beginning of 2nd year = 7%, Beginning of 3rd year = 8.5%, Beginning of 4th year = 9.5% and Beginning of 5th year = 11%

1. Total Interest paid in the first five years =
2. Total principal cleared in the first five years =
3. Yield for the loan over the 5-year period =