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.
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.