objects are wrong size

I am using Illustrator CS5 on a MacBook Pro running 10.9.1. When I make new objects their dimensions are not precise, although I am using the application bar to spec the sizes. When I use the built-in calculator function to resize the objects, the errors grow.

For example:

rectangle, 7" x 10", intended size. RESULT: 7.0124" x 10.1251". This rectangle has no fill, its rule is 1'.

When I use the calculator to make it 1/9 of the intended size, the result I get should be 0.7778" x 1.111". Instead, the result is 0.0.7653 in x 1.108 in.

WHAT IN THE WORLD IS WRONG? And how can I fix this?

Thanks,

Nicky