NEEDS TO BE DONE IN MICROSOFT EXCEL WITH CALCULATIONS. IF YOU CANNOT DO IT IN EXCEL THEN DO NOT ANSWER.

MakeNu Mortgage Company is offering a new mortgage instrument called the Stable Mortgage. This mortagage is composed of both a fixed rate and adjustable rate component. Mrs. Maria Perez is interested in financing a property, which costs $100,000 and is to be financed by Stable Home Mortgages on the following terms. Initial interest rate= 9 percent

Index= one year treasuries

Payments reset each year

Margin = 2 percent

Interest rate cap = None

Payment= None The projected one-year U.S. Treasury Bill index which the ARM is tied, is as follows; (BOY)2=10 percent; (BOY) 3= 11 percent; (BOY) 4= 8 percent; (BOY) 5 = 12 percent. Calculate Mrs. Perez's total monthly payments and end of year loan balances for the first five years. Calculate the lender's yield, assuming Mrs. Perez repays the loan after 5 years. b. Repeat part (a) under the assumption that the initial interest rate is 9.5 percent and there is an annual interest rate cap of 1 percent.