If an ARM Index Increased 15%, the Negative Amortization on a Loan

If an ARM index increased 15%, the negative amortization on a loan with a 5% annual payment cap is calculated by:

A) Using the same payment as last year and deducting 5% from the principal balance
B) Increasing the payment by 5%
C) Totaling the difference between the payment as if no cap existed and the 5% capped payment
D) Compounding the difference between the payment as if no cap existed and the 5% capped payments