Question: Consider a 25-year $220,000 5/1 ARM with a 2.8% margin and which is based on the CMT index. Suppose the value of the CMT index

Consider a 25-year $220,000 5/1 ARM with a 2.8% margin and which is based on the CMT index. Suppose the value of the CMT index is 3.5% when the loan is initiated and is 4.55% 5 years later. Assume that all interest rates use monthly compounding.
(a) Calculate the monthly payment for the first 5 years.
(b) Calculate the unpaid balance at the end of the first 5 years.
(c) Calculate the monthly payment for the sixth year?

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