Question

Scenario 24-3 grant gant was a doctor in 1944 and earned $12,000 that year. his daughter, gretta gant, is a doctor today and she earned $210,000 in 2005. the price index was 17.6 in 1944 and 184 in 2005. refer to scenario 24-3. grant gant’s 1944 income in 2005 dollars is

Answer 1

Grant Gant's 1944 income of $12,000 is equivalent to $158,181.82 in 2005 dollars when adjusted for inflation using the given price indexes.

Step-by-step explanation:

The question asks to adjust Grant Gant's 1944 income to its equivalent in 2005 dollars, given the price indexes for both years. Grant Gant's 1944 income of $12,000 is equivalent to $158,181.82 in 2005 dollars when adjusted for inflation using the given price indexes. To do this, we can use the formula for adjusting for inflation, which is:

Income in Current Year Dollars = (Income in Past Year Dollars) × (Current Year Price Index / Past Year Price Index)

Using the information provided:

(Grant Gant's 1944 Income in 2005 Dollars) = $12,000 × (184 / 17.6)

Calculating the above we get:

$158,181.82

Therefore, Grant Gant's 1944 income of $12,000 is equivalent to $158,181.82 in 2005 dollars when adjusted for inflation.