Assignment 5: #1

In 1950 the median family income was $3,319, while the average Major League baseball player salary was $13,228. In 1998 the median household income was $38,885, while the average Major League baseball player was $1.4 million.

Using the CPI.xls

, convert each of the 1950 incomes to constant 1998 dollars.

1998

CPI

1950

CPI

*1950

salary

 1950

Salary

in 1998 Constant Dollars The 1950 Median family income in 1998 Constant Dollars is: 163.0

*$3319  $22448.01

24.1

The 1950 average MLB player salary in 1998 Constant Dollars is: 163.0

*$13228  $89, 467.39

24.1

Then compare the 1950 average salary of baseball players in 1998 constant dollars to the actual 1998 average baseball player salary. Were you better off being a Major League Baseball player in 1950 or 1998?

You were better off in 1998 as a 1998 player is making $1.4million. This is a lot more than the 1950 player is making in 1998 Constant Dollars ($89,467.39).

Next compare the average household 1950 income in constant 1998 dollars to the actual 1998 value. Were you better off earning the median household income in 1950 or 1998?

Again, you’re better off in 1998 making $38,885. This is much more than the median family income in 1950 in 1998 Constant dollars ($22,448.01).

Have baseball player salaries risen faster than the salaries of the average worker? To answer this question answer the following question: What percent are the actual incomes in 1998 greater than the respective 1998 constant dollar values of the 1950 incomes? Show your work for both the median household and the baseball player salaries.

Remember for “percent greater / less than ” problems the value that comes after the word “than” is your reference value in the equation:

NewValue

Re  Re

ferenceValue ferenceValue

 % in decimal  14.65 or 1465% 89, 467.01

 .73 or 73% 22, 448.01

Open the file DePaul_Tuition.xls

. This file contains the DePaul tuition from 1970 to 2010.

Calculate the tuition in constant 2010 dollars. Then make an XY scatter graph of DePaul tuition in constant dollars and paste it into your document.

Josh loves money. He starts with 2010?

1.3million dollars in 1977 and his money collection has grown by 1.3% every year since. How much money does he have in his collection, in Using the consumer price index, convert each year’s money to constant 2010 dollars. Graph the result. Is Josh’s money growing at a rate greater than, less than, or equal to inflation?

The annual inflation rate is defined as therefore (166.6-163.0)/163.0 or 2.2%.

Open the file CPI.xls

years 1970-2010 into your Word focus on the years 1970-2010.

the percentage change in the annual CPI from the previous year to the current year. For example, the CPI in 1998 was 163.0 while the CPI in 1999 was 166.6. The inflation rate for 1999 was , which contains the annual CPI from 1912 to 2010. Add a new column to the table that contains the inflation rate for each year. Paste the resulting table for the document. Please do not paste the entire table from 1912-2010 into the document; we want to

Let’s say you ring up $7,000 on your credit card which has a 19% APR. The bank offers you the option to make the minimum payment which is 2% of the beginning balance or $25 - whichever is higher. Making only the minimum payment each month how long does it take you to pay off the balance? How much do you pay in interest over the life of the loan?

Month Beginning Balance Payment Interest Principal End Balance