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a boat costs $16,600 and decreases in value by 14% per year. how much will the boat be worth after 11 years ?

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Answer:

In the end, $16600 has turned into $3159.30.

Explanation:

Notice that at each compounding step above, the new principal can be found by applying this formula:


NewPrincipal = CurrentPrincipal × (1 + r)

where r is your interest rate at the time of compounding, in this case -14% (or -0.14 in the calculations).


As an example, look at the first compounding step:


$14276.00=$16600.00 × (1 + -0.14).

And the second:


$12277.36=$14276.00 × (1 + -0.14).

In fact, the whole compound interest amount boils down to multiplying (1+r), or (1+-0.14), times your original principal 11 times (11 years at 1 compouding(s) per year).


Mathematically though, this is equivalent to multiplying your orginial principal by the factor (1+-0.14)11.


If we do this, we'll get that your final amount is:


$16600.00 × (1+-0.14)11=$3159.30


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