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Adjustable Rate Mortgage Excel Assignment Consider the following information and answer each of the questions below using arithmetic, algebra, and Excel functions as appropriate. Larz is considering an ARM loan offered by a local lender. The loan amount is $585,000. The term of the loan is 10 years. The margin on the loan is 3%. The teaser (first year only) is 1%. The composite rate adjusts annually and is subject to annual and lifetime caps of 2% and 5%, respectively. The loan does not provide for negative amortization nor does it provide floors. Assume the following forecast of index rates. The prevailing rate in the market for similar FRM loans is 5.25%. Make no changes to this Excel workbook other than entering information needed in the yellow and pink highlighted cells and your answer calculation in the green highlighted cells. Only the green highlighted cells will be graded. Do not round intermediate calculations (let Excel store all decimal values). Year 0 1 2 3 4 Index Rate Composite Forecast Rate 1.80% 2.25% 2.50% 3.75% 5.75% 7.50% 5.50% 4.00% 3.25% 4.10% . 6 7 8 9 months 1 through 12? Payment 1. What is the payment Loan Balance Loan Term (years) Payments per Year Index Margin Annual cap Lifetime cap Teaser Composite Rate Balance 2. What is the balance at the EOY 1? Payment Composite Rate Remaining Loan Term (years) Payments per Year Payment 3. What is the payment in months 13 through 24? Loan Balance Remaining Loan Term (years) Payments per Year Composite Rate Balance 4. What is the balance at the EOY 2? Payment Composite Rate Remaining Loan Term (years) Payments per Year Payment 5. What is the payment in months 25 through 36? Loan Balance Remaining Loan Term (years) Payments per Year Composite Rate Balance 6. What is the balance at the EOY 3? Payment Composite Rate Remaining Loan Term (years) Payments per Year Payment 7. What is the payment in months 37 through 48? Loan Balance Remaining Loan Term (years) Payments per Year Composite Rate Balance 8. What is the balance at the EOY 4? Payment Composite Rate Remaining Loan Term (years) Payments per Year Payment 9. What is the payment in months 49 through 60? Loan Balance Remaining Loan Term (years) Payments per Year Composite Rate Balance 10. What is the balance at the EOY 5? Payment Composite Rate Remaining Loan Term (years) Payments per Year Payment 11. What is the payment in months 61 through 72? Loan Balance Remaining Loan Term (years) Payments per Year Composite Rate Balance 12. What is the balance at the EOY 6? Payment Composite Rate Remaining Loan Term (years) Payments per Year Payment 13. What is the payment in months 73 through 84? Loan Balance Remaining Loan Term (years) Payments per Year Composite Rate Balance 14. What is the balance at the EOY 7? Payment Composite Rate Remaining Loan Term (years) Payments per Year Payment 15. What is the payment in months 85 through 96? Loan Balance Remaining Loan Term (years) Payments per Year Composite Rate Balance 16. What is the balance at the EOY 8? Payment Composite Rate Remaining Loan Term (years) Payments per Year Payment 17. What is the payment in months 97 through 108? Loan Balance Remaining Loan Term (years) Payments per Year Composite Rate Balance 18. What is the balance at the EOY 9? Payment Composite Rate Remaining Loan Term (years) Payments per Year Payment 19. What is the payment in months 109 through 120? Loan Balance Remaining Loan Term (years) Payments per Year Composite Rate (Hint: annualized IRR by multiplying by 12 due to monthly cash flows) 20. What is the yield to the lender if this loan is held to maturity? Month 0 1 2 3 8 9 10 11 12 13 14 15