Question: A borrower takes a 30-year, fully amortizing, 5/1 ARM for $175,000 with an initial interest rate of 3.50%. Assuming the index on which the loan

A borrower takes a 30-year, fully amortizing, 5/1 ARM for $175,000 with an initial interest rate of 3.50%. Assuming the index on which the loan rate is based rises by 2% in the fourth year of the loan and remains at that level, what will the payment be in the sixth year of loan? (Please show all your steps and formulas to better understand it and please no Excel)

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