Practice final examination

LSP 120

Patrick Callahan

November 17, 2009

Instructions: 

1.      Do not open any programs other than Excel and Word and do not open any files other than those used in the exam.  Turn off and put out of sight any other papers or electronic devices.  If I see any violation of this rule, I will judge it as evidence of cheating and the violator will get an F on the final. 

2.       Open a Word document and place your DePaul id# (but not your name) in the upper right-hand corner.  See me if you do not remember your id#. 

3.      Do not copy the question into the Word document.  Just provide the question number and your answer.  Show your work if you would like to have the chance of getting part credit.

4.      Links to files you need to open can be accessed through the course home page, linked by “Final examination files.”  In the questions below, the names of linked files are printed in underlined bold italics.

5.       For the final itself: When you have finished, staple the worksheets to the printed Word document and hand it in to me.  You may leave when you have finished the examination.  For this practice exam: When you are finished, you may leave; return, if you wish, at 12:20 for a review of the answers. 

CPI

1.  Open Average Baseball Salaries 1967-1997 and CPI. 

a.  Convert the average salary [column C] to constant dollars using 1969 as the base.  Make a graph of the salaries 1969-1997 converted to constant dollars and the current value salaries and paste this graph in your Word document.  [Do not worry about the values on the horizontal axis.  I have been unable to fix whatever glitch exists in the Excel file.]

b.  In a brief paragraph, explain what the constant dollar graph is showing. 

It shows that the increase in salaries in real dollars . . . constant buying power . . . with the effects of inflation removed . . . has been much less steep than the increase in the salaries in current [nominal] values. 

LINEAR OR EXPONENTIAL?

2.      During her career, a successful lawyer increased her fees by 5% per year over her charge for the previous year.  Would the growth in her prices be linear or exponential?  Explain with sufficient detail that you demonstrate that you understand the definitions of linear and exponential growth.

        Exponential.  The rate of increase is constant.  The absolute value would have to be increasing each year. 

3.       Open the file Freedonia Oil Production.  Is the decline in its production linear, exponential, or neither.  Explain your answer so that you make it clear that you aren’t guessing. 

        Exponential.  The absolute value decreases each year, which makes it not linear.  The rate (percentage) decrease is constant, which makes it exponential. 

LINEAR MODELS

4.   Add a linear trendline to the constant dollar series in the chart you created for problem 1.  Copy the equation and the R-square value into your Word document. 

y = 10863x - 37093
R² = 0.8928

4.      Refer to the chart of the number of cell phone subscribers (below or next page). 

a.  What does the formula for the trend line tell you precisely about the trend in cell phone subscribers?  [Pay attention to the scale of the y-axis.]

On average it has been increasing by about 16.7 million per year.  [Note that the numbers represent thousands of cell phones, so the slope had to be multiplied by 1000.]

         b.   Use the equation to predict the number of cell phone subscribers in 2008. 

        Y = 10863 * (2008) - 37093

          243,286,200

c.  Use the equation to predict when there will be 900 million cell phone subscribers.  [Remember: This would be 900,000 units of 1000; the data are in thousands.]

900,000 = 10863 * X - 37093

2047

 

EXPONENTIAL MODELS

5.   What is the general formula for exponential growth? 

        Y = X * (1+ r) ^ t       

        Y =  X (1+r)^t

6.      For the following three questions, suppose that (a) the population in a suburban county is 70,000, (b) the population growing at 3% per year, (c) you are working for that county and (d) your manager tells you to estimate how many years the country has before its population passes 200,000.  Assume that the population growth rate stays at 3% per year, 

a.   What would be the population in 5 years?

Y = 70000 * (1.03) ^ 5

b.   How many years will it take for the population to reach 200,000? 

200000 =  70000 * (1.03) ^ t

(200000/70000) = 1.03^t

log(200000/70000) = t * log(1.03)

log(200000/70000)/log(1.03) = t

35.5

7.   Suppose person’s body weight was 30% fat.  She then started an exercise and diet program that caused a 10% reduction in body fat each month.  Create an Excel file showing the amount of body fat for each month of the program.  Copy and paste the rows showing the month number and body fat percentage for the months when the body fat level reached and fell below 5%. 

CENTRAL TENDENCY

8.   For the following questions, open the file State Population. 

a.      Compute the mean and median populations of U.S. states.  Enter the information into your exam answers, clearly indentifying each.

2. Write a brief explanation for why the two measures of average are so different. 

The most populous states are outliers that pull the mean (average) well above the median.  The median is unaffected by outliers because it only takes into consideration the middle value.   

COMPOUND GROWTH

9.  After purchasing a car, you decide to start saving for a home.  This year the company that you work for made a huge profit and you received a $10,000 (after-tax) bonus.  You decide to deposit this money in a 5-year CD with an APR of 5% that compounds monthly. 

a.   How much money will you have after 4 years? 

Balance = 10000 * (1+(.05/12))^48

c.   What is the annual percentage yield on this account?

Balance = 10000 * (1+(.05/12))

(10551.62-10000)/10000 = 5.5162%

DEBT AMORTIZATION

10.       Create an amortization table showing the payment schedule for a 3-year, $20,000, 8% automobile loan.  How much will you have paid in total for your used Hummer? 

= 20000 + sum of interest payments

= 20000 + 2562.18

=22562.18