A Borrower Takes a 30-Year,fully Amortizing,5/1 ARM for $225,000 with an Initial

Multiple Choice

A borrower takes a 30-year,fully amortizing,5/1 ARM for $225,000 with an initial interest rate of 4.375%.Assuming the index on which the loan rate is based rises by 1% in the fourth year of the loan and remains at that level,what will the payment be in the sixth year of loan?

A) $1,123.39
B) $1,241.89
C) $1,259.94
D) $1,403.71