Cecil has obtained a $139,000, 5/1 30-year arm at 5%. during the first 3 years, he has an option of paying interest only. if he accepts this offer, what would be his initial payment? a.$732.09 b.$756.92 c.$579.17 d.$587.50

The initial payment will be $579.17

Step-by-step explanation:

Cecil has obtained a $139,000, 5/1 30-year ARM at 5%.

During the first 3 years, he has an option of paying interest only. So, it is simple interest.

Simple interest is given as :

here, p = 139000

r = 5%

t = 30

Putting values in formula:

= $208500

As this is interest for 30 years or 360 months. So, for initial interest we will divide the interest with 360.

≈ $579.17

Therefore, the initial payment will be $579.17