Adjustable Rate Mortgage - Create an amortization spreadsheet and answer the following questions for a $600,000 10-year 3/1 ARM loan that is fully-amortizing with monthly payments. The loan terms include a teaser rate of 2.0%. After the initial teaser rate period, the interest rate resets annually to the index rate plus a margin of 1.50%. The loan terms also include an annual interest rate cap of 2.0% and a lifetime interest rate cap of 6.0% over the initial teaser rate. Expectations for the beginning-of-year values for the appropriate index are as follows:

a.) Calculate the appropriate contract rate for years 1 10 and then complete the amortization schedule.

b.) What is the effective interest rate (EIR) for the loan if it is held to maturity (assume no upfront fees/points or prepayment penalties)?

c.) Assuming upfront points of 3.0%, what is the loans EIR if it is held until maturity?

d.) Assuming upfront points of 3.0%, what is the loans EIR if it is prepaid at the end of year 4 (assume no prepayment penalties)?