Diploma Unit 34 - Help needed with RPI

uknitty

I'm just about tearing my hair out with a question regarding RPI in the Osbourne AWS Workbook. (For those of you that have the book the question is number 4.5).

"Adjust the sales figures for the changing price levels shown by the retail price index"

This is how my workings look, with the book answer in the final column. Clearly a massive difference !

Sales Index RPI Adjusted Sales Answer as per Book
800 100% 155 800 975
890 111% 163 846 1032
920 115% 169 844 1029
950 119% 176 837 1020
990 124% 189 959 990

I arrived at my adjusted sales figures using sales for year in question * RPI year 1 / RPI Year in question. I can't even see how the figures quoted in the answer have been arrived at - please could someone help ?

Thanks very much all for taking a look ( and hopefully for explaining where I am going wrong!)

Rinske

Hi,

The answers in the book use the adjusted RPI points (using the 155, 163, 169, 176 and 189). The book also works it out from year 5 as a base, so getting the number to the current value of year 5, instead of back to the year 1 figures.

I haven't got this book, so I can't check what the exact question is or why they do this. But the calculations used as I make it out is as follows:

(sales year in question x RPI year 5 / RPI year in question)
For year 1:
800 times 189 divided by 155 = 975
For year 2:
890 x 189 / 163 = 1032
For year 3:
920 x 189 / 169 = 1029
For year 4:
950 x 189 / 176 = 1020

Does this help?

Cheers,
Rinske

uknitty

Thanks Rinske

Thank you very much ! I can see exactly what I was doing wrong now

All of the practice questions I have attempted have used year 1 as the base, so I fell in to the trap of thinking that this was the only way to do things.

Thanks for giving me a "lightbulb moment"