Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006.The consumer price index was 160 in 1996 and 266 in 2006.Janelle's 2006 salary in 1996 dollars is
A)$39,097.74.
B)$43,062.50.
C)$68,900.00.
D)$108,062.50.

Question

Quizplus · Accepted Answer

We need to adjust Janelle's 2006 salary to 1996 dollars. To do this, we use the formula:

Adjusted Salary = (Original Salary) x (New CPI / Old CPI)

Plugging in the given values, we get:

Adjusted Salary = $65,000 x (160 / 266) = $39,097.74

Therefore, the answer is A) $39,097.74.

Janelle Earned a Salary of $40,000 in 1996 and $65,000