Suppose your salary in 2015 is $70,000. Assuming an annual inflation rate of 6%, what salary do you need to earn in 2023 in order to have the same purchasing power?

To determine what salary you would need in 2023 to have the same purchasing power as $70,000 in 2015, given a 6% annual inflation rate, we can use the formula for compound interest, which applies here for inflation:

\[
\text{Future Salary} = \text{Present Salary} \times (1 + \text{inflation rate})^n
\]

Where:
- $\text{Present Salary} = 70,000$
- $\text{inflation rate} = 6\% = 0.06$
- $n = 2023 - 2015 = 8$ years

Let's calculate this.

\[
\text{Future Salary} = 70,000 \times (1 + 0.06)^8
\]

I'll now compute this.To maintain the same purchasing power as $70,000 in 2015, considering an annual inflation rate of 6%, you would need to earn approximately **$111,569.37** in 2023.

Would you like further details on this calculation or have any questions?

Here are five related questions for practice:
1. What would your salary need to be in 2025 with the same inflation rate?
2. How would the future salary change if the inflation rate was 3% instead of 6%?
3. What would happen to purchasing power if inflation dropped to 0%?
4. How can you adjust your savings to counteract the effects of inflation?
5. What would your salary need to be in 2023 with a 7% inflation rate?

**Tip:** Keep track of inflation when negotiating raises to ensure your purchasing power stays the same or increases!

Learn how to calculate the future salary needed in 2023 to maintain the same purchasing power as a $70,000 salary in 2015, given a 6% annual inflation rate. This problem covers key concepts like compound interest and exponential growth. Suitable for students in Grades 9-12.

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