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.
1998CPI
*1950salary  1950Salary in 1998 Constant Dollars
1950CPI
The 1950 Median family income in 1998 Constant
Dollars is:
163.0
24.1
*$3319  $22448.01
The 1950 average MLB player salary in 1998
Constant Dollars is:
163.0
24.1
*$13228  $89, 467.39
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 ferenceValue
 % in decimal
Re ferenceValue
1, 400, 000  89, 467.01
 14.65 or 1465%
89, 467.01
38,885  22, 448.01
 .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 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
2010?
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 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
therefore (166.6-163.0)/163.0 or 2.2%.
Open the file CPI.xls, 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
years 1970-2010 into your Word
document. Please do not paste the entire table
from 1912-2010 into the document; we want to
focus on the years 1970-2010.
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