You are seeking a $(30-$year$)$ ARM loan of $$225,000$ which will charge $2\mathrm{.}5$ points. You will also incur $$1400$ in other third party closing costs related to this loan. Assuming you keep this loan for $4$ years, what are your CF$\text{'}$s$,$ the yield to lender and cost to borrower $($expressed as APR's$)?$ What do you pay each year in interest?

Initial rate $2\mathrm{.}75\%$

Annual adjustments $-$ Tbill $+2\mathrm{.}0\%($rounded to $\frac{1}{8}\%)$

No payment or interest rate caps

Tbill Index, now at $1\mathrm{.}93,$ then changes annually to: $3\mathrm{.}73,5\mathrm{.}62,7\mathrm{.}26$

Is this loan teased? Explain.

On separate paper complete your handwritten computations. This will probably require more than one page to show all of your work, including the table of cash flows you use to compute the Lender Yield. After completing your calculations summarize the results in the table given below. Be sure to turn in your handwritten calculations as well as the completed table shown below or you will receive zero for this assignment.

Problem $1.$ After completing your calculations, summarize your results in the table below.

$\backslash$table$[[$Year$,$Index,$\backslash$table$[[$Int$.$ Rate$],[$Charged$]],\backslash$table$[[$Monthly$],[$Payment$]],\backslash$table$[[$Amount Paid$],[$to Interest$]],$EOY Balance$],[1,1\mathrm{.}93,,,,],[2,3\mathrm{.}73,,,,],[3,5\mathrm{.}62,,,,],[4,7\mathrm{.}26,,,,]]$

Yield to Lender $=,\%$ Cost to Borrower $=$