1 + DAY > 0 (40 pt) 2) An Adjustable Rate Mortgage (ARM) for $80.000 is made for 15 years and payments will be made monthly with the following terms: Initial interest rate: 4 percent (annually) Index: 1 year treasures Payments reset each year Margin 2 percent Interest rate cap: 2 percent annually and 4 percent in whole life of the mortgage Payment cap: none Discount points: 2 percent Fully amortizing toan based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: BOY: Beginning of year Beginning of year (BOY) 2.5%, and (BOY) 3:6%. (BOY)4: 7% Compute the payments, loan balances, and yield for the ARM for the four year period You should fill the empty places on the table. In case you don't have a financial calculator, you can use capital letters to show how you calculate each of the empty places Year BOY Balance Uncapped Rate Capped Rate Payment EOY Balance 1 2 3 4 0 1 + DAY > 0 (40 pt) 2) An Adjustable Rate Mortgage (ARM) for $80.000 is made for 15 years and payments will be made monthly with the following terms: Initial interest rate: 4 percent (annually) Index: 1 year treasures Payments reset each year Margin 2 percent Interest rate cap: 2 percent annually and 4 percent in whole life of the mortgage Payment cap: none Discount points: 2 percent Fully amortizing toan based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: BOY: Beginning of year Beginning of year (BOY) 2.5%, and (BOY) 3:6%. (BOY)4: 7% Compute the payments, loan balances, and yield for the ARM for the four year period You should fill the empty places on the table. In case you don't have a financial calculator, you can use capital letters to show how you calculate each of the empty places Year BOY Balance Uncapped Rate Capped Rate Payment EOY Balance 1 2 3 4 0