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Question
An employee currently earns a salary of Rs.5,000 per year and his salary in the base year of 2010 is Rs.4,000 per year. What should be the raise in his salary in order to maintain the same standard of living with time if the CPI today is 500?
An employee currently earns a salary of Rs.5,000 per year and his salary in the base year of 2010 is Rs.4,000 per year. What should be the raise in his salary in order to maintain the same standard of living with time if the CPI today is 500?
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Solution
The correct option is C Rs.15,000
Given, CPI = 500
Current Salary = Rs.5,000
Base salary = Rs.4,000
Since CPI has become 5 times its value (100) at the base year of 2010.
Therefore, the salary should be commensurate i.e. it should also be 5 times of his salary in 2010.
⇒ S01 = 5×4,000 = Rs.20,000
⇒ Required increase in salary = 20,000 – 5,000 = Rs.15,000
Rs.15,000
Given, CPI = 500
Current Salary = Rs.5,000
Base salary = Rs.4,000
Since CPI has become 5 times its value (100) at the base year of 2010.
Therefore, the salary should be commensurate i.e. it should also be 5 times of his salary in 2010.
⇒ S01 = 5×4,000 = Rs.20,000
⇒ Required increase in salary = 20,000 – 5,000 = Rs.15,000
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