You are considering a $495,000, 15 year, monthly amortizing price level adjusted mortgage (PLAM) at 3% real interest rate. The inflation in first 5 years is expected to be at 4%, in the next 5 years at 5%, and in the final five years at 2%.

**post spreadsheet with all work/forumulas visible**

a) Develop an annual amortization table for this contract as shown below.

b) Consider 1.25% commitment fees, 2 points and 4.5% closing cost on the loan. Calculate the APR. Use Excel functions for ALL calculations. For simplicity, consider only the annually aggregated cash flows when calculating the APR.

c) Draw an annual graph of how the monthly payment and mortgage balance change over the 15 years (as shown below).