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Baron Art Mart, Inc. Student Coaching Notes. Concepts Covered. Statistics Macroeconomics Financial Accounting Business Law. Question 1: Determining Mrs. Kim’s Real Income. Divide Price Index by 100 to Obtain Adjusted Price Index

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concepts covered
Concepts Covered
  • Statistics
  • Macroeconomics
  • Financial Accounting
  • Business Law
question 1 determining mrs kim s real income
Question 1: Determining Mrs. Kim’s Real Income
  • Divide Price Index by 100 to Obtain Adjusted Price Index
  • Divide Gross Income by Adjusted Price Index to Obtain Real Income
  • Example, For 1991:

Adjusted Price Index = 136.2/100 = 1.362 Real Income = $50,599/1.362 = $37,150.51

question 1 descriptive statistics
Question 1:Descriptive Statistics

Find the Value of and Know the Meaning of:

  • Mean
  • Median
  • Sample Variance
  • Standard Deviation
question 2 what is a price index
Question 2:What is a Price Index?
  • Shows Relationship between Price Level in Given Year and Price Level in Base Year.
  • The Base Year in Case is 1982-1984. Price Index for Base Year is Always 100.
  • Index of 136.2 for 1991 Means General Level of Prices Has Risen 36.2% since 1982-1984 for Bundle of Goods Purchased in 1982-1984.
question 2 regression results
Question 2:Regression Results

Show the Value of and Know the Meaning of:

  • Coefficient of Determination (R Square)
  • p-Value for Year
  • Regression Coefficient for Year
  • Regression Equation:

Price Index = Intercept + (Coefficient) x (Year)

question 3 present value
Question 3:Present Value
  • Present value is a technique that considers the time value of money.
  • PV allows cash amounts expected to be paid or received at different times in the future to be brought to present day values. Then the amounts can be combined.
  • If amounts differ over time, calculate the present value of each and add. If amounts are equal each period, calculate the present value of an annuity.
  • It is easiest to use the net present value function on your spreadsheet.
question 3 projection of income
Question 3:Projection of income

Do your calculations for question 3 in the following order:

1. Use mean real income from question 1 to determine projected real income for 2006 – 2015.

2. Use regression equation from question 2 to determine projected adjusted price indices.

3. Use projected real income, adjusted price indices, and tax to estimate Mrs. Kim’s net actual income for 2006 – 2015.

4. Determine the present value of the future net cash flow.

question 4 false imprisonment
Question 4:False Imprisonment
  • Reasonable Cause:
    • Articulable knowledge of particular facts sufficiently reasonable to suspect the detained person of shoplifting
  • Reasonable Manner
  • Reasonable Time
question 4 reasonable manner
Question 4:Reasonable Manner


  • Use of threats
  • Coercion of customer
  • Intimidation of customer
  • Use of abusive language towards the customer
  • Use of force against the customer
  • Failure to promptly inform the customer of the reasons for the detention
  • Detention takes place in public next others
question 5 future income compensation
Question 5: Future Income Compensation
  • Goal of compensatory damages:
    • Make the injured party whole again
  • Lost future incomes are recoverable:
    • Nature and occurrence of lost future income must be shown by evidence of reasonable reliability, not mere speculation.
    • Evidence of reasonable reliability may include reliance on specific statistical models based on past earning records.
    • Proper measurement of damages is the present value of net future income after taxes.