Using tab $2$ in the template, create the amortization spreadsheet and answer the

following questions for a $$700,00010-$year adjustable$-$rate mortgage $($ARM$)$ loan that is

fully$-$amortizing and has monthly payments. A teaser rate of $4\mathrm{.}4\%$ applies to the

mortgage payments and amortization during the first $2$ years of the loan. After the second

year, the annual interest rate on the loan is equal to the going rate on an index $+$ a margin

of $2\mathrm{.}7\%,$ subject to an annual interest rate cap of $2\mathrm{.}5\%$ and a lifetime interest rate cap of

$5\mathrm{.}8\%$ over the initial teaser rate. Expectations for the beginning$-$of$-$year values for the

appropriate index are as follows:

Year Index

$33\mathrm{.}1\%$

$44\mathrm{.}7\%$

$56\mathrm{.}5\%$

$62\mathrm{.}5\%$

$72\mathrm{.}9\%$

$85\mathrm{.}1\%$

$96\mathrm{.}6\%$

$106\mathrm{.}0\%$

a$)$ Based on these expectations and conditions, what would be the actual $($contract$)$

interest rates applied to the mortgage payment during years $1$ through $10?$

b$)$ What would be the APR on this loan, if held until maturity $$ assuming up$-$front points

of $2\mathrm{.}0\%?$

C$)$ What is the outstanding balance at the end of year $6?$