Annual CPI values
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
184.00
188.9
195.3
201.6
207.342
215.303
214.537
218.056
224.939
229.594
232.957
QRINC offered new employees a starting salary of $54,172 in 2013. What would a comparable starting salary have been in 2003? (round to the nearest dollar)
just multiply the salary by the ratio of the CPI for those two years.
To find the comparable starting salary in 2003, you need to adjust the salary for inflation using the CPI values.
First, calculate the percentage change in CPI from 2003 to 2013:
Percentage change = ((CPI in 2013 - CPI in 2003) / CPI in 2003) * 100
Percentage change = ((232.957 - 184.00) / 184.00) * 100
Percentage change = (48.957 / 184.00) * 100
Percentage change = 0.266 * 100
Percentage change = 26.6%
Next, calculate the inflation-adjusted salary in 2003:
Inflation-adjusted salary = (1 + (Percentage change / 100)) * Salary in 2013
Inflation-adjusted salary = (1 + (0.266 / 100)) * $54,172
Inflation-adjusted salary = 1.00266 * $54,172
Inflation-adjusted salary = $54,244.44
Therefore, a comparable starting salary in 2003 would have been approximately $54,244.
To determine the comparable starting salary in 2003, we need to adjust the salary from 2013 to account for the change in the Consumer Price Index (CPI) from 2003 to 2013.
The CPI measures the average change in prices of goods and services over time. It serves as an indicator of inflation or the increase in the cost of living. By considering the CPI values for both years, we can calculate the inflation rate.
To calculate the inflation rate, we use the formula:
Inflation Rate = (CPI in Year 2 - CPI in Year 1) / CPI in Year 1
Let's calculate the inflation rate from 2003 to 2013:
Inflation Rate = (232.957 - 184.00) / 184.00
Inflation Rate = 0.264
The inflation rate from 2003 to 2013 is approximately 26.4%.
Now, we can find the comparable starting salary in 2003 by adjusting the salary from 2013:
Comparable Starting Salary in 2003 = Starting Salary in 2013 * (1 + Inflation Rate)
Comparable Starting Salary in 2003 = $54,172 * (1 + 0.264)
Comparable Starting Salary in 2003 = $54,172 * 1.264
Comparable Starting Salary in 2003 ≈ $68,507
Therefore, the comparable starting salary in 2003 would have been approximately $68,507, rounding to the nearest dollar.