Question

Suppose your salary in 2016 is $30,000. Assuming an annual inflation rate of 3%, what salary do you need to earn in 2022 in order to have the same purchasing power

Answer 1

$35821.5

Step-by-step explanation:

Using compound formula

A= P( 1+ r/ n)^ nt

A= amount

t= time period

n=Number of years

2016----2022= 6years

Substitute for the values we have

A= $30,000[ 1+ (3/100)/1]^ (6)

A= $35821.5

Hence, salary you need to earn in 2022 in order to have the same purchasing power is $35821.5