Samantha planned to borrow $500,000 over 15
years to purchase a townhome. Her lender pro-
vided her with two options. The first option has a
fixed interest rate of 3.99%. The second offer is an
ARM loan with an initial rate of 2.99% for the first.
year with a 1% increase after one year. Which op-
tion will cost her less money over the lifetime of the
loan?