Annual salary(2012) = $70,000
Annual inflation = 7%
Therefore, the salary you need to earn in 2020 in order to have the same purchasing power can be calculated below
[tex]2020-2012=8\text{ years}[/tex][tex]FV=PV\times(1+r)^n[/tex]where
n = 8
r = 7/100 = 0.07
PV = 70, 000
[tex]\begin{gathered} FV=70,000(1+0.07)^8 \\ FV=70000(1.07)^8 \\ FV\text{ = 70000}\times1.71818617983 \\ FV=120273.032588 \\ FV=\text{ \$}120,273.03 \end{gathered}[/tex]The salary you need to earn in 2020 to have the same purchasing power = $120, 273.03
