David earned a salary of $43,500 in 1994 and $89,000 in 2010.The consumer price index was 148.2 in 1994 and 215.3 in 2010.David's 1994 salary in 2010 dollars is
A)$43,849.05
B)$61,263.43
C)$63,195.34
D)$93,655.50

Question

Quizplus · Accepted Answer

To find David's 1994 salary in 2010 dollars, we need to adjust for inflation using the consumer price index.

First, we find the inflation rate between 1994 and 2010:
Inflation rate = (CPI in 2010 - CPI in 1994) / CPI in 1994
Inflation rate = (215.3 - 148.2) / 148.2
Inflation rate = 0.4527 or 45.27%

Next, we adjust David's 1994 salary for inflation by multiplying it by the inflation rate and adding it to the original salary:
Adjusted salary = 43,500 × (1 + 0.4527) = $63,195.34

Therefore, the best choice is C.

David Earned a Salary of $43,500 in 1994 and $89,000