Assume you borrow an ARM of $120,000 for 30 years. Given initial interest rate=S%, margin=200 basis points, Index rate at EOY1-6%, EOY 2-4,5%, an annual rate cap-250 basis points, and the lender charges 3 points upfront, what is the appropriate interest rate to determine payment for year 2? 6.5% 5% 7.5 5.5%