Sara earned $10,000 at age 40. Assume that the average national wage when Sara was age 60 is $39,800, and is $15,000 when she was age 40. The indexed value of earnings is:

Question

Quizplus · Accepted Answer

To calculate the indexed value of earnings, we can use the formula: 
Indexed value = (average national wage in year of index / average national wage in base year) x actual earnings in base year

Substituting, we get: 
Indexed value = (39,800 / 15,000) x 10,000
Indexed value = 2.653 x 10,000
Indexed value = $26,530

Therefore, the correct choice is C, with an indexed value of $26,530.

Sara Earned $10,000 at Age 40