Question: A borrower takes a 30-year, fully amortizing, 7/1 ARM for $400,000 with an initial interest rate of 2.144%. Assuming the index on which the loan

A borrower takes a 30-year, fully amortizing, 7/1 ARM for $400,000 with an initial interest rate of 2.144%. Assuming the index on which the loan rate is based rises by 1% in the fifth year of the loan and remains at that level, what will the monthly payment be in the eighth year of the loan? (Show your inputs and results from the calculator in each step, and use 4 decimals in the interest rates).

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