Consider a 25 year $250,000 5 1 ARM having a 2 5 margin and based on the CMT index Suppose that the interest rate is initially 6 and the value of the CMT index is 4 4 five 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

Question: Consider a 25-year $250,000 5/1 ARM having a 2.5% margin and based on the CMT index. Suppose that the interest rate is initially 6% and

Consider a 25-year $250,000 5/1 ARM having a 2.5% margin and based on the CMT index. Suppose that the interest rate is initially 6% and the value of the CMT index is 4.4% five years later. Assume that all interest rates use monthly 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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