If the salary of a person in the base year is Rs. 4000 per annum and the current year salary is Rs 6000, by how much should his salary rise to maintain the same standard of living, if the CPI of the current year is 400?
Base year salary = Rs. 4000, Base year index = 100 (assumption)
Salary required in the current year to maintain the same standard of living of base year
= Base Year Salary xCPI of Current Year/CPI of Base Year = 4000 x400/100 =Rs 16000
Current year salary = Rs. 16000
The increase in current salary required = 16000 - 6000 = Rs. 10000