$($Q$)$ A borrower is offered a $30$ year, fully amortizing ARM with an initial rate of $5\%.$ After the

first year, the interest rate will adjust each year, using $1$ year LIBOR as the index, plus a margin

of $1\mathrm{.}75\%($also $\frac{1}{1}$ nown as $175$ basis points$[$bp$]).$ The price of the property is $$8,000,000$ and the

loan will have an initial LTV ratio of $75\%$ At the first reset date, $1$ year LIBOR is at $6\%.$ What is

the borrower's payment during the $2$ nd year of the loan?

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