2 c. If the starting salary for a H.S. History teacher is $42,000 in Greeley, based on the cost of living, wh should the starting salary for a H.S. History teacher be in Denver?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Help with 1. C please
1.
MFLA CPI
You can use your knowledge of CPI to negotiate salaries.
For example: My friend, Allison, was applying for jobs and was offered a position in two different locations.
Wilmington, NC offered her $55,000
City X offered her $51,000
The cost of living in Wilmington NC is much higher than city X.
The CPI
= 101.8 and CPI
Wilmington
If you take Wilmington's CPI and compare it to City X, then
Given CPI
city x
en CPI
Greeley
= 91.08
which means $1 in city X is equivalent to $1.1177 in Wilmington.
This also means $51000 in City X is equivalent to $57002.70 in Wilmington.
In terms of the amount of money, Wilmington was offering more ($55,000 vs. $51,000), but in terms of purchasing
power, City X was offering more money. Allison used this to her advantage and asked Wilmington if they would be willir
to match City X's value of money and they did! So Allison was offered a job at $57,000 instead of $55,000.
= 112.2 and CPI
Denver
= 144.2
CPI Wilmington
CPI city x
101.8
91.08
= 1.1177
a. Take Greeley's CPI and compare it to Denver's CPI. Explain what the number represents.
112.2
b. Take Denver's CPI and compare it to Greeley's CPI. Explain what the number represents.
1442=0.77
144.2
51.28
712.2
c. If the starting salary for a H.S. History teacher is $42,000 in Greeley, based on the cost of living, wha
should the starting salary for a H.S. History teacher be in Denver?
= 209.3
= 117.8 and CPI
Chicago
NY,NY
a. Take Chicago's CPI and compare it to New York's CPI. Explain what the number represents.dane
Take New York's CPI and compare it to Chicago's CPI. Explain what the number represents.
Transcribed Image Text:1. MFLA CPI You can use your knowledge of CPI to negotiate salaries. For example: My friend, Allison, was applying for jobs and was offered a position in two different locations. Wilmington, NC offered her $55,000 City X offered her $51,000 The cost of living in Wilmington NC is much higher than city X. The CPI = 101.8 and CPI Wilmington If you take Wilmington's CPI and compare it to City X, then Given CPI city x en CPI Greeley = 91.08 which means $1 in city X is equivalent to $1.1177 in Wilmington. This also means $51000 in City X is equivalent to $57002.70 in Wilmington. In terms of the amount of money, Wilmington was offering more ($55,000 vs. $51,000), but in terms of purchasing power, City X was offering more money. Allison used this to her advantage and asked Wilmington if they would be willir to match City X's value of money and they did! So Allison was offered a job at $57,000 instead of $55,000. = 112.2 and CPI Denver = 144.2 CPI Wilmington CPI city x 101.8 91.08 = 1.1177 a. Take Greeley's CPI and compare it to Denver's CPI. Explain what the number represents. 112.2 b. Take Denver's CPI and compare it to Greeley's CPI. Explain what the number represents. 1442=0.77 144.2 51.28 712.2 c. If the starting salary for a H.S. History teacher is $42,000 in Greeley, based on the cost of living, wha should the starting salary for a H.S. History teacher be in Denver? = 209.3 = 117.8 and CPI Chicago NY,NY a. Take Chicago's CPI and compare it to New York's CPI. Explain what the number represents.dane Take New York's CPI and compare it to Chicago's CPI. Explain what the number represents.
Expert Solution
Step 1

As per instructions question 1.C will be attempted. 

CPI stands for Consumer Price Index. It is an index that calculates the weighted average cost for a basket of goods. 

In the given question, the CPI of Denver is greater than CPI of Greeley. That means a person in Denver should receive a higher salary compared to Greeley to buy the same basket of goods. 

The formula how much a teacher should earn in Denver can be determined with the formula below:

Teacher Salary in Denver = CPIDenverCPIGreeley*Salary in Greeley

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