An ARM is made for $$170,000$ for $30$ years with the following terms:

Initial interest rate $=7$ percent; Index $=1-$ year Treasuries

Payments reset each year; $,$ Margin $=2$ percent

Interest rate cap $=$ None

Payment cap $=5$ percent increase in any year

Discount points $=2$ percent

Fully amortizing; however, negative amortization allowed if payment cap reached

Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows:

Beginning of year $(BOY)2=7$ percent; $(BOY)3=8\mathrm{.}5$ percent; $(BOY)4=9\mathrm{.}5$ percent; $(BOY)5=11$ percent.

Compute the monthly payments and loan balances for an ARM that has a maximum $5\%$ annual payment cap and allows negative amortization $($for the first two years$).$