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

Multiple Choice

$1,403.71

$1,241.89

$1,123.39

$1,259.94