Question

Lydia bought a car for $20,000. It is expected to depreciate at a continuous rate. What will be the value of the car in 2 years? Use k = 0.105 and round to the nearest dollar.

Answer 1

`\$16,021`

Explanation:

we know that

The formula to calculate the depreciated value is equal to

`V=P(1-k)^(x)`

where

V is the depreciated value

P is the original value

k is the rate of depreciation in decimal

x is Number of Time Periods

in this problem we have

`P=\$20,000\\k=0.105\\x=2\ years`

`V=\$20,000(1-0.105)^(2)=\$16,020.50`

round to the nearest dollar

`\$16,020.50=\$16,021`