$4.$ A $1-$year adjustable$-$rate mortgage is made for $$600,000$ at an initial rate of $6$ percent for $30$

years with an annual reset. The borrower believes that the interest rate at the beginning of

year $($BOY$)2$ will increase to $7$ percent.

a$.)$ Compute the monthly payments for the ARM for the two$-$year period.

b$.)$ What will be the loan balance at the end of two years?

c$.)$ What is the yield to the lender if the loan balance is paid off at the end of two years?