Question

The inflation rate between last year and this year was 16 per cent. The CPI was 120 this year. What was the CPI last year?

108.23

103.25

103.45

116.00

Answer 1

Answer - The inflation rate between last year and this year is 16 percent. The CPI was 120 this year.

Suppose CPI was 'X' in last year. Then 16% of X can be found,

16% of X = (16*X)/ 100

This year CPI will be equal to last year CPI index plus 16% of last year index which is 120. Therefore we can write,

120 = X + (16X / 100)

120 = (100X + 16X) / 100

12,000 = 116X

X = 12,000 / 116

X = 103.44827

Or, X = 103.45

Last year CPI was 103.45.

Option C is the correct answer