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A mortgage company offers borrowers a 4% annual interest rate on the one-year ARM that is amortized for 30 years. The index rate is forecast

A mortgage company offers borrowers a 4% annual interest rate on the one-year ARM that is amortized for 30 years. The index rate is forecast to be 5% for next year and the margin on this loan is 2%. The annual interest rate adjustment cap is 2%. What is the adjusted interest rate for the second year? What are the monthly payments for year 1 and 2 if $200,000 is borrowed?

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