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5. Consider a loan with the following terms for an ARM: Loan Amount = $150,000 Starting...

5. Consider a loan with the following terms for an ARM:

    • Loan Amount = $150,000
    • Starting Rate = 5%
    • Term = 30 Years
    • Adjustment Interval = 1 Year
    • Payment Cap = 6%
  2. What is the initial monthly payment?

  1. What is the loan balance at the end of year 1?

Suppose the new composite rate at the beginning of year 2 is 8%. What is the new monthly payment at the beginning of year 2? HINT: read the above information carefully

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