An ARM is made for $$250,000$ 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

Required:

a$.$ Compute the payments and loan balances for the ARM for the five$-$year period.

b$.$ Compute the yield for the 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 ARM for the five$-$year period.

Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar.