Ontario passed a law in 1996 that the names of all public servants earning $100 000 or more will be published starting 1997. This year (2013), Ontario is planning to revise the amount to an equivalent purchasing power amount in 2014. What is the amount in 2014, beyond which the names of the Ontario's public servants should be published, assuming the recommended discount rate is 2.5% per year?
A) $65 720
B) $100 000
C) $102 500
D) $142 500
E) $152 162

Question

Quizplus · Accepted Answer

To adjust the $100,000 threshold from 1996 to 2014 equivalent, considering an annual inflation rate of 2.5%, we use the formula for compound interest: Future Value = Present Value * (1 + rate)^number of years. From 1996 to 2014 is 18 years, so the calculation is $100,000 * (1 + 0.025)^18, which gives approximately $152,162.

Ontario Passed a Law in 1996 That the Names of All