Use the Following Information to Answer Bellow Questions

Multiple Choice

Use the following information to answer bellow Questions.
On January 1, 2020, Teller Corporation borrows $1 million for three years at the prime rate plus 1.5%, with the rate adjusted annually. The interest is due December 31 of each year. The prime rate is currently 0.5%. To hedge against rising interest rates, Teller buys a three-year, 2% interest rate cap for $5,000, paid in full immediately. Teller's loan was renewed December 31, 2020, when the prime rate was 0.7%, and the fair value of the cap declines by $800. By the end of 2021, the cap's value increases by $300. The cap qualifies as a hedge of the future variable interest payment, and all income effects of the loan and the cap are reported in interest expense.
-What is the change in the intrinsic value of the cap in 2021?

A) $ 300 increase
B) $1,700 decrease
C) $2,000 increase
D) $1,700 increase