Adjustable rate mortgage—exact payments: This is a continuation we only approximated the increased payment when the rate for an ARM increases: We assumed that over the first 24 months you accrue 0...

Adjustable rate mortgage—exact payments: This is a continuation we only approximated the increased payment when the rate for an ARM increases: We assumed that over the first 24 months you accrue 0 equity in your home. (Your equity in a home is the total you have paid toward the principal.) We address that point here. We make use of the equity formula

Here E is your equity, in dollars, after k monthly payments. The quantities P, t, and r are defined as . Round r to five decimal places. We assume as in that you borrowed $325,000 at an initial APR of 4.5% with a term of 30 years.

a. What equity have you accrued after 24 months?

b. When your rate adjusts to 7% after 24 months, the new amount borrowed is $325,000 less your equity. The term is now 28 years. What is your new montly payment?