Question: A borrower has been analyzing different adjustable rate mortgage (ARM) alternatives for the purchase of a property. The borrower anticipates owning the property for five

 A borrower has been analyzing different adjustable rate mortgage (ARM) alternatives

A borrower has been analyzing different adjustable rate mortgage (ARM) alternatives for the purchase of a property. The borrower anticipates owning the property for five years. The lender first offers a $160.000,30-year fully amortizing ARM with the following terms: Initial interest rate =6 percent Index =1-year Treasuries Payments reset each year Margin =2 percent Interest rate cap = None Payment cap = None Negative amortization = Not allowed Discount points =2 percent Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Beginning of year (BOY) 2=7 percent: (BOY)3=85 percent, (BOY)4=9.5 percent: (BOY)5=11 percent. Required: a. Compute the payments and loan balances for the unrestricted ARM for the five-year period b. Compute the yield for the unrestricted ARM for the five-year period. Complete this question by entering your answers in the tabs below. Compute the payments and loan balances for the unrestricted ARM for the flve-year period. Note: Do not round intermediate calculations, Aound "Payments" to 2 decimal places and "Loan Balance" to the nearest dollar amount

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