. Suppose that you have decided to purchase a house for $400,000 using an adjustable-rate mortgage with the terms provided below. Loan-to-value ratio: 90% Index rate: one-year Treasury yield (currently 3.00%) Margin: 250 basis points Amortization: 15 years with monthly payments and compounding Annual cap: 1.5 percentage points Lifetime cap: 5 percentage points Adjustment period: Annually Teaser Rate 2.50%

13. How much principal will you pay with the 76th payment of the loan? a. $245.11b. $379.57c. $1119.24d. $1390.22e. None of the above