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Les Buys a House in 2009

question 49

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Les buys a house in 2009.He obtains a fixed 10 per cent mortgage interest rate, and makes payments of $1000 per month.The 2009 CPI is 90, the 2010 CPI is 90, the 2011 CPI is 100, the 2012 CPI is 110 and the 2013 CPI is 120.
a.What is the real mortgage interest rate Les pays in 2010, 2011, 2012 and 2013?
b.What are the values in 2009 dollars of Les's monthly mortgage payments in 2010, 2011, 2012 and 2013?


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