Lary is considering an ARM loan offered by a local lender. The loan amount is $300,000. The term of the loan is 10 years. The index today is 2%. The margin on the loan is 2%. The teaser (first year only) is 1%. The composite rate adjusts annually and is subject to annual and lifetime caps of 2% and 5%. The loan does not provide for negative amortization nor does it provide floors. The loan requires 2 points at origination. The prevailing rate in the market for similar FRM loans is 6.25%. Assume the following forecast of index rates. What is the amount of the payment due in each of months 25 through 36? Year Index Rate Forecast
0 2.00%
1 2.25%
2 2.50%
3 3.10%
4 4.15%
5 7.50%
6 5.50%
7 7.50%
8 8.00%
9 4.10%

Required:
a. At the start of year 2, what is the market value of Lary's ARM loan at a required yield of 5.5% assuming no prepayment?
b. What is the expected yield to the lender at origination from Lary's ARM loan assuming no prepayment?

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Which of the following is an effective strategy when interest rates are falling? a. use long-term loans to take advantage of current low rates. b. use short-term loans to take advantage of lower rates when you refinance a loan. c. deposit to a short-term savings instrumentals to take advantage of higher interest rates when they mature. d. select short-term savings instruments to lock in earnings at a current high rates.

During the year, the delph company had no beginning or ending inventories and it started, completed, and sold only two jobs—job d-75 and job c-100. it provided the following information related to those two jobs: job d-75: molding fabrication total direct materials cost $ 375,000 $ 325,000 $ 700,000 direct labor cost $ 200,000 $ 160,000 $ 360,000 machine-hours 15,000 5,000 20,000 job c-100: molding fabrication total direct materials cost $ 300,000 $ 250,000 $ 550,000 direct labor cost $ 175,000 $ 225,000 $ 400,000 machine-hours 5,000 25,000 30,000delph had no overapplied or underapplied manufacturing overhead during the year. assume delph uses a plantwide overhead rate based on machine-hours.1-a. compute the predetermined plantwide overhead rate.1-b. compute the total manufacturing costs assigned to job d-70 and job c-200.1-c. if delph establishes bid prices that are 150% of total manufacturing costs, what bid price would it have established for job d-70 and job c-200? 1-d. what is delph's cost of goods sold for the year? assume delph uses departmental overhead rates based on machine-hours.2-a. compute the predetermined departmental overhead rates.2-b. compute the total manufacturing costs assigned to job d-70 and job c-200.2-c. if delph establishes bid prices that are 150% of total manufacturing costs, what bid price would it have established for job d-70 and job c-200? 2-d. what is delph's cost of goods sold for the year?