Five years ago, he borrowed $280,000 to buy a new duplex in North Scottsdale. at that point you were able to finance it with a 5/1 ARM (full amortization over 30 years) that will reset to a higher interest rate in year 6. when you made the purchase, you made a 25% down payment and financed the rest. the initial interest rate was 4.8%. once the fixed portion is completed, the rate would be adjusted annually to LIBOR plus 3%.

1. What is the loan balance at the end of year 5?

2. If the LIBOR rate at the end of year 5 was 3.25%, what would your payment be from year 6?