The index to which an ARM is tied is forecasted as follows: Beginning of year (BOY) 2 = 6%; BOY 3 = 8%. What is the balanace at the end of year 2?

Principal = 200,000

term = 25

points = 3%

Initial Rate = 7%

Margin = 2%

Answers:

193,659.57

194,111.20

190,088.23

196,651.85