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. If the monthly payment for the first year is $708.14, how much more will
His monthly payment be for the second year?

A) $114.00
B) $47.31
C) $77.75
D) None of the above is correct.