Solve the Problem $5 \%$ And an ARM with a First-Year Rate Of

Multiple Choice

Solve the problem.
-You have a choice between a 30 -year fixed rate loan at $5 \%$ and an ARM with a first-year rate of $2 \%$ . The ARM rate rises to $6.5 \%$ at the start of the third year. Neglecting compounding and changes in principal, estimate your monthly savings with the ARM during the first year on a $\$ 180,000$ loan.

A) $\$ 430$
B) $\$ 450$
C) $\$ 470$
D) $\$ 500$