Complete/answer each of the following problems providing an Excel spreadsheet with the solution to receive full credit. For example, create the loan amortization table for each of the problems.

Assume Bank of South America offers a 30-year, $200,000 adjustable rate mortgage (ARM) with the following terms: Initial interest rate = 6.5% Index = 1-year treasuries Payments reset each year Margin = 2% Interest rate cap = 1% annually, 3% lifetime Discount points = 2% Fully amortizing; however, negative amortization allowed if interest rate caps reached. Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Beginning of the year (BOY) (BOY) 2 = 6% (BOY) 3 = 7.5% (BOY) 4 = 8.5% (BOY) 5 = 10% Compute the monthly payments, monthly loan balances, and yield for the unrestricted ARM for the five-year period (60 months).