Suppose your salary in 2012 is $60,000. If the annual inflation rate is 3%, what salary do you need to make in 2018 in order for it to keep up with inflation? Round your answer to the nearest cent, if necessary.

Answer 1

To calculate the salary you would need in 2018 in order to keep up with inflation, you can use the formula:

Adjusted Salary = Current Salary * (1 + Inflation Rate)^Number of Years

First, calculate the number of years from 2012 to 2018:
2018 - 2012 = 6 years

Next, plug in the values from the question:
Adjusted Salary = $60,000 * (1 + 0.03)^6
Adjusted Salary = $60,000 * (1.03)^6
Adjusted Salary = $60,000 * 1.19561871573
Adjusted Salary ≈ $71,747.12

Therefore, you would need to make approximately $71,747.12 in 2018 in order for your salary to keep up with inflation.