Question: I need help with d. Basic ARM is made for $250,000 at an initial interest rate of 6 percent for 30 years with annual reset

I need help with d.

Basic ARM is made for $250,000 at an initial interest rate of 6 percent for 30 years with annual reset date. The borrower believes that the interest rate at the beginning of the year 2 will increase to 7 percent.

a. Assuming that a fully amortizing loan is made, what will monthly payments be during year 1? PMT = $1498.88

b. Base on (a), what will the loan balance be at the end of year 1? FV = $246,929.97

c. Given that the interest rate is expected to be 7 percent at the beginning of year 2, what will monthly payments be during year 2? PMT = $1659.69

d. What will be the loan balance at the end of year 2?

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