1. Suppose a borrow is shopping for a 30-year, monthly payment ARM loan for $150,000. The borrower and lender both expect future index rates of 7% at EOY1, 8.5% at EOY2, 9.5% at EOY3, and 11% at EOY 4. The loan will balloon at EOY5. What is the expected IRR assuming a lender has the following features:
   1. Initial interest rate of 6%
   2. Index rate 1-year t-bills
   3. Annual reset on anniversary date
   4. Margin 2%
   5. No caps, no floors, no negative amortization