Let's assume that a $355,000 mortgage has a maturity of 20 years and an interest rate of 5.75% and adjusts after year 3. The margin is 2% and the index is the CMT. The annual cap is 2% and the first year cap is 2% and the lifetime cap is 5%. What is the mortgage payment in year one?

A. $2594.80

B. $2040.77

C. $2492.40

D. $1,984.09

In the above scenario, what is the interest rate in year 3 if the CMT index is 6% at the time of the rate adjustment?

A. 8%

B. 7.75%

C. 8.75%

D. 9%