The cost-of-living index number in year 2015 and 2018 were 97.5 and 115 respectively. The salary of CA Jitendra in 2015 was 195000. How much additional salary was required for him in 2018 to maintain the same standard of living as in 2015?

Question

Answer

Calculation of Additional Salary Required for CA Jitendra

Given:

Cost-of-living index number in 2015 = 97.5

Cost-of-living index number in 2018 = 115

Salary of CA Jitendra in 2015 = 195000

To Find: Additional salary required for CA Jitendra in 2018 to maintain the same standard of living as in 2015

Formula Used

Cost of living index number is used to measure the relative cost of living in different cities. It is calculated as follows:

Cost-of-living index number = (Cost of a basket of goods and services in the current year / Cost of the same basket of goods and services in the base year) x 100

Solution

Let's calculate the increase in the cost of living between 2015 and 2018:

Increase in cost of living = [(Cost-of-living index number in 2018 - Cost-of-living index number in 2015) / Cost-of-living index number in 2015] x 100

Substituting the given values:

Increase in cost of living = [(115 - 97.5) / 97.5] x 100 = 18%

Therefore, the cost of living has increased by 18% between 2015 and 2018.

To maintain the same standard of living in 2018 as in 2015, CA Jitendra will need to increase his salary by 18%. Let's calculate the additional salary required:

Additional salary required = (18/100) x 195000 = 35100

Therefore, CA Jitendra will need an additional salary of Rs. 35100 in 2018 to maintain the same standard of living as in 2015.

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