You are buying a home and will have a$375,000 mortgage. You are deciding between a conventional 30 mortgage loan at 4.5% and an ARM with an initial rate of 4%, an annual interest rate cap of 1 percentage point, and a lifetime interest rate cap of 5 percentage points.

A-Calculate the monthly mortgage payment for the conventional loan.

B-Calculate the initial monthly ARM mortgage payment.

Then at the end of the first year, interest rates have increased to cause the annual cap to be triggered. Calculate the second year payment for the ARM if the balance owed at the end of the first year is $368,396.11