Regression Equation:

Price Index= Intercept + (Coeff.) x (Year)

Assume that Mrs. Cook's real income will not change over the next ten years. Use the mean real income from previous steps to determine projected real income for the future ten years of Mrs. Cook's work expectancy. Use the regression equation from hint 2 to project adjusted price indices for the next ten years. Assume that Mrs. Cook pays 20% of her actual income in taxes and that Green will not provide significant state assistance. Use the projected real income and adjusted price indices to estimate Mrs. Cook's net actual income for the next ten years. What would be the likely amount of an award to Mrs. Cook based on a present value rate of 8%? Discuss the factors that could cause Mrs. Cook's future income to differ from your estimate. Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Gross Income Price Index Adjusted Price Index Real Income Real Income 60,056 188.9 1 889 31,792.48 31,792.48 61,257 195.3 1.953 31,365,59 31,365,59 62.482 201.6 2016 30,993.06 30.99306 63,732 2073 2.073 30,743.85 30.743.85 65,007 215.3 2.153 30,193.68 30.193.68 66,307 214.5 2.145 30,91235 30.91235 67,633 218.1 2.181 31.010.09 31,010 09 58,986 2249 2.249 30,674.08 30,674 08 70,366 229.6 2.296 30.54721 30.64721 71,773 233 233 30.803.86 30,803 86 73,208 236.7 2.367 30,928.60 30.928.60 74,672 237 237 31,507.17 31,507.17 76,165 240 24 31,735.42 31,735 42 77 688 245.1 2.451 31,696.45 31.596.45 79,242 251.1 2511 31,557 95 31,557 95 Group 7: Formulas and Findings Adisuled Price Index Price Index/100 Real Income Gross Income AdjPrice Index Total: Mean: Median: Standard Deviation: Variance 466,561 84 31.104.12 30.993.06 477.44 22795101 466 561 84 31.104.12 30.993.06 477.44 227951.01 Assume that Mrs. Cook's real income will not change over the next ten years. Use the mean real income from previous steps to determine projected real income for the future ten years of Mrs. Cook's work expectancy. Use the regression equation from hint 2 to project adjusted price indices for the next ten years. Assume that Mrs. Cook pays 20% of her actual income in taxes and that Green will not provide significant state assistance. Use the projected real income and adjusted price indices to estimate Mrs. Cook's net actual income for the next ten years. What would be the likely amount of an award to Mrs. Cook based on a present value rate of 8%? Discuss the factors that could cause Mrs. Cook's future income to differ from your estimate. Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Gross Income Price Index Adjusted Price Index Real Income Real Income 60,056 188.9 1 889 31,792.48 31,792.48 61,257 195.3 1.953 31,365,59 31,365,59 62.482 201.6 2016 30,993.06 30.99306 63,732 2073 2.073 30,743.85 30.743.85 65,007 215.3 2.153 30,193.68 30.193.68 66,307 214.5 2.145 30,91235 30.91235 67,633 218.1 2.181 31.010.09 31,010 09 58,986 2249 2.249 30,674.08 30,674 08 70,366 229.6 2.296 30.54721 30.64721 71,773 233 233 30.803.86 30,803 86 73,208 236.7 2.367 30,928.60 30.928.60 74,672 237 237 31,507.17 31,507.17 76,165 240 24 31,735.42 31,735 42 77 688 245.1 2.451 31,696.45 31.596.45 79,242 251.1 2511 31,557 95 31,557 95 Group 7: Formulas and Findings Adisuled Price Index Price Index/100 Real Income Gross Income AdjPrice Index Total: Mean: Median: Standard Deviation: Variance 466,561 84 31.104.12 30.993.06 477.44 22795101 466 561 84 31.104.12 30.993.06 477.44 227951.01