Question

A car is manufactured for a cost of $12,500. The dealership purchases the car and puts a markup of 67% on the car. The car is purchased and loses 57% of its value through depreciation over the course of 8 years (according to the Kelly Blue Book). The owner sells the car on Craigslist for 60% of the amount the car is worth at that current time (of the Kelly Blue Book). What was each price listed below AND what did the car sell for Craigslist? (Round each part to the nearest penny).

1. Dealer buys the car for $

2. Owner purchases the car for $

3. Owner sells the car on Craigslist for $

Answer 1

1. $12,500 — dealer cost
2. $20,875 — owner cost
3. $5385.75 — owner's selling price

Explanation:

The problem statement is missing a lot of information, so we'll make some assumptions:

• the cost of manufacture is the dealer's cost
• the markup percentage uses the dealer's cost as a base
• the car is purchased for the marked price in each case.

1. The dealer's cost is the cost of manufacture: $12,500.

2. The marked-up price is

$12,500 + 0.67×12,500 = $20,875.

3. The book value after 8 years is

$20,875 - 0.57×20,875 = $8976.25

So, the Craigslist price is

0.60×$8976.25 = $5385.75