Question

Kronos Industries bought a desktop for $3,000. It is expected to depreciate at a rate of 10% per year. What will the value of the desktop be in 4 years? Round to the nearest dollar.

Question 2 options:

$1,968

$2,057

$2,700

$4,391

Answer 1

A) $1968

Explanation:

Since the value will depreciate over 4 years, we can use the equation:

A = P(1 + r)^t

Plug in: P = $3000, r = -0.1, t = 4 --> A = 3000(1 - 0.1)⁴

Subtract: A = 3000 * 0.9⁴

Power: A = 3000 * 0.6561

Multiply: A = 1968.3 ≈ $1968