Consider an adjustable rate mortgage

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Reference no: EM131836380

Consider an adjustable rate mortgage of $100,000, no payment cap, no interest rate cap, 2% margin, annual adjustment, annual payments, 3 year maturity, initial index rate: 7%

(a) What is the first year’s payment?

(b) If the second year index rate is 9%, and the third year index rate is 13%, what are the second year and third year’s payments?

(c) If the index rates are the same as (b), if there is an annual interest rate cap of 3%, what is the second year and third year’s payment?

Reference no: EM131836380

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