Question

Suppose the value of a car depreciates 8% every year. To the nearest dollar, what will a car that cost $23,995 be worth after 5 years? (Remember, the formula is A = P(1 + r)t.)

Answer 1

The car will worth $15815 after 5 years.

Explanation:

The formula is:
`A=P(1+r)^t`, where P = Initial cost, A = Final cost, r = Rate of change in cost per year and t = Number of years.

Here,
`P= 23995, t= 5`

and
`r= 8\%=0.08`

As here the value of the car depreciates every year, so we need to plug the value of
`r` as negative. So,
`r=-0.08`

Now plugging the above values into the formula, we will get.....

`A=23995(1-0.08)^5\\ \\ A=23995(0.92)^5\\ \\ A=15814.6611... \approx 15815`

(Rounded to the nearest dollar)

So, the car will worth $15815 after 5 years.