A movie star was paid $1 million in 1960 to do a movie.The CPI was 29.3 in 1960 and the CPI in 2012 was 226.665.Approximately how much did the movie star earn in 2012 dollars?

Question

Quizplus · Accepted Answer

To adjust the earnings for inflation, we need to use the formula: 
Adjusted income = (Original income) x (Current CPI) / (CPI in the year of original income) 
Plugging in the values: 
Adjusted income = 1,000,000 x 226.665 / 29.3 = $7.74 million 
Therefore, the movie star earned approximately $7.74 million in 2012 dollars. The answer is D.

A Movie Star Was Paid $1 Million in 1960 to Do