Assignment Five

1.     Open the file DePaul_Tuition.xls.   This file contains the DePaul tuition  from 1970 to 2007. Note the asterisks on some of the figures.  You will also need CPI.xls.

    a. In column D, calculate the tuition in 2007 constant dollars.  Then make an XY scatter graph of DePaul tuition in constant dollars and paste it into your document. 

    b. If the price of an item increases at the same rate as inflation, what would the constant dollar graph for that item look like?

    c. What does the graph of DePaul tuition in 2007 constant dollars tell you about tuition increases over the years?  Is DePaul tuition growing faster, slower, or at the same rate as inflation?

    d. Why do you think DePaul's tuition has grown the way it has?  Do you think the tuition growth at DePaul is similar to the tuition growth at other universities?  What factors may be affecting the cost of higher education?  Give your answer in the form of a well written paragraph.

2.  The annual inflation rate is defined as the percentage change in the annual CPI from the one year to the next.  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%.  

    a. Open the file CPI.xls, which contains the annual CPI from 1912 to 2007.  In column C calculate the inflation rate for each year.   (You will enter a formula in cell C13 using the cell references for the values in B12 and B13.  Please take your time and think this out.  Once you get in the correct formula, you can just fill down.  5.72% is the value that should appear in cell C70 and 3.23% is the value that should appear in cell C106).  Paste the resulting table for the years 1970-2007 into your Word document.  Please do not paste the entire table from 1912-2007 into the document; we want to focus on the years 1970-2007. 

    b. Make an XY scatter graph of the inflation rate from 1970 to 2007.  Paste it in your Word document.

    c. High inflation means that the prices of goods increase a lot and that money we earn and have saved up in the past is worth less. Interest rates for houses, cars, and credit cards rise if the inflation rate is high. For a variety of reasons, stock prices tend to fall even on hints of higher inflation.  According to these facts and the graph you made above, what years were the most financially challenging?  Why?