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You are borrowing $ 1 , 0 0 0 , 0 0 0 with a 4 . 0 % 3 / 1 ARM. The rate

You are borrowing $1,000,000 with a 4.0%3/1 ARM. The rate is reset with a spread of 150 basis points over one-year Treasuries. Assume Treasuries are 3.75% at the beginning of the first rate reset. What is the loan balance at the end of year 4?

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