Which of the following salaries will have a purchasing power of $24,035 if the inflation rate is five percent?
A-$25,815
B-$27,523
C-$26,000
D-$25,300
The following describes the status of the O'Daniel's budget.
A) It is in surplus
B) It is in deficit
C) It is balanced
To determine which salary will have a purchasing power of $24,035 after a five percent inflation rate, we need to calculate the inflation-adjusted salaries using the formula:
Adjusted Salary = Salary / (1 + Inflation Rate)
Let's calculate the adjusted salaries for each option:
For option A:
Adjusted Salary = $25,815 / (1 + 0.05)
Adjusted Salary = $25,815 / 1.05
Adjusted Salary ≈ $24,590.48
For option B:
Adjusted Salary = $27,523 / (1 + 0.05)
Adjusted Salary = $27,523 / 1.05
Adjusted Salary ≈ $26,216.19
For option C:
Adjusted Salary = $26,000 / (1 + 0.05)
Adjusted Salary = $26,000 / 1.05
Adjusted Salary ≈ $24,761.90
For option D:
Adjusted Salary = $25,300 / (1 + 0.05)
Adjusted Salary = $25,300 / 1.05
Adjusted Salary ≈ $24,095.24
Comparing the adjusted salaries, we can see that option C, with an adjusted salary of approximately $24,761.90, is the closest to the target purchasing power of $24,035. Therefore, the correct answer is C-$26,000.