The Following Problem Involves Adjustable-Rate Mortgage

Multiple Choice

The following problem involves adjustable-rate mortgage. You will need a table of monthly payments.
-Harry has a 1-year ARM for $75,000 over a 25-year term. The margin is 2%, and the index rate starts out at 8.5% and increases to 10% at the first adjustment. The balance of principal at the end of
The first year is $74,113.56. Find the amount of interest owed for the first month of the first year.

A) $674.79
B) $531.25
C) $656.25
D) None of the above is correct.