Paul just graduated from college and landed his first​ "real" job, which pays ​$31 comma 200 a year. In 8 ​years, what will he need to earn to maintain the same purchasing power if inflation averages 5 ​percent?

To find out what Paul will need to earn in 8 years to maintain the same purchasing power given an average inflation rate of 5%, we use the **future value formula** for inflation:

\[
FV = PV \times (1 + r)^t
\]

Where:
- $FV$ = future value (the salary needed in 8 years),
- $PV$ = present value (current salary),
- $r$ = inflation rate,
- $t$ = number of years.

Given:
- $PV = 31,200$,
- $r = 5\% = 0.05$,
- $t = 8$.

Now, plug in the values:

\[
FV = 31,200 \times (1 + 0.05)^8
\]

Let me calculate that for you.Paul will need to earn approximately **$46,097** in 8 years to maintain the same purchasing power if inflation averages 5% annually.

Do you want more details or have any questions?

Here are 5 related questions:
1. How does the purchasing power of money change with inflation?
2. What is the impact of higher inflation rates on long-term savings?
3. How can individuals plan their income growth to keep pace with inflation?
4. What other factors could affect purchasing power aside from inflation?
5. What is the difference between real income and nominal income?

**Tip**: It's a good idea to consider investing in assets that outpace inflation to preserve or grow your wealth over time.

Paul just graduated from college and landed his first 'real' job, which pays $31,200 a year. In 8 years, what will he need to earn to maintain the same purchasing power if inflation averages 5 percent?

Learn how to calculate the future salary needed to maintain purchasing power with a 5% inflation rate. This example walks through using the future value formula to determine that a salary of $31,200 today will need to grow to $46,097 in 8 years to keep up with inflation. Suitable for high school students in Grades 10-12.

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