Final answer:
The sentence correctly completed with the future perfect tense is: 'Katelyn will have finished sanding the boat by the time I arrive home tonight.', indicating that the action will be completed before another future event.
Step-by-step explanation:
The correct option that completes the sentence using the correct perfect tense is 'will have finished'.
The sentence should read: 'Katelyn will have finished sanding the boat by the time I arrive home tonight.' This form of the verb indicates that the action of sanding the boat will be completed at some point in the future before another event (arrival home) takes place, which is exactly the function of the future perfect tense.