If a person makes $30,000 in

2004 and the inflation rate is 4% annually, how much is this
salary worth in the year 2008 (in terms of 2004 dollars)?

What I have is 2004=30000
2005=30000x1.04=32448
then continuing through the years to
2008=35095.76
30000/35095.76x30000=25644.12 is what his salary would be worth in 2008 in terms of 2004 dollars

To determine how much a salary is worth in a different year in terms of a base year, you need to account for the effect of inflation. Here's how you can calculate it:

1. Start with the base year salary, which in this case is $30,000 in 2004.

2. Determine the annual inflation rate, which in this case is 4%. This means that the value of money increases by 4% each year.

3. Calculate the new value of the salary for each year by multiplying the base year salary by (1 + inflation rate). In this case, you multiply $30,000 by 1.04 for each subsequent year.

- 2004: $30,000
- 2005: $30,000 x 1.04 = $31,200
- 2006: $31,200 x 1.04 = $32,448
- 2007: $32,448 x 1.04 = $33,730.92
- 2008: $33,730.92 x 1.04 = $35,095.76

4. Now, if you want to find out the value of the 2004 salary in terms of 2008 dollars, you need to adjust for the inflation that occurred between 2004 and 2008.

Divide the 2004 salary ($30,000) by the 2008 value calculated above ($35,095.76) and multiply by 2008 dollars:

($30,000 / $35,095.76) x $35,095.76 = $25,644.12

Therefore, the salary of $30,000 in 2004 would be worth approximately $25,644.12 in terms of 2008 dollars.