Question

William Howard Taft was paid $75,000 per year for his service as US president in 1909....

William Howard Taft was paid $75,000 per year for his service as US president in 1909. In 2013, the U.S. President, Barak Hussein Obama was paid $400,000. Assume that the price index in 1909 and 2013 were 9 percent and 233 percent, respectively. What was the value of President Taft’s salary in 2013 dollars? Whose salary was worth more in 2013?

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Answer #1

Value of President Taft's salary in 2013 can be calculated with a simple formula:
Taft's salary x Price Index in 2013 = 75,000 * 233/9 = 1,941,666.67
Price Index in 1909
Therefore President Taft's salary $75,000 in 1909 is equal to a whooping $1,941,666.67 in 2013.
Without a doubt, Taft's salary is worth more than Obama's salary in 2013.

Formula I used:

Past dollars in terms of recent dollars = Dollar amount × Ending-period CPI ÷ Beginning-period CPI.

More recent dollars in terms of past dollars = Dollar Amount × Beginning-period CPI ÷ Ending-period CPI.

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