Kristen was a doctor in 1944 and earned $12,000 that year. Her daughter, Amy, is a doctor today and she earned $210,000 in 2005. The price index was 17.6 in 1944 and 184 in 2005.
Amy’s 2005 income in 1944 dollars is
a $20,086.96
b $11,931.82
c $1,985,454.55
Price index in 1944 = 17.6
Price index in 2005 = 184
Zinnia’s 2005 income = $2,10,000
Zinnia’s 2005 income in 1944 dollars is
Value of dollars = dollars × beginning period index ÷ ending period index
Value of dollars = $2,10,000 × 17.6 ÷ 184
= $200,86
So the salary of Zinnia is $2,10,000 in 2005 worth $20,086 in 1944.