Question

A new car is purchased for 20300 dollars. The value of the car depreciates at 95% per

year. What will the value of the car be, to the nearest cent, after 11 years?

Answer 1

$6770.65

Explanation:

The purchase price is $20,300

The depreciation rate is 9.5% per year, in decimal, that is:

9.5/100 = 0.095

We want to find the value of car after 11 years. We will use the compound decay formula:

`F=P(1-r)^t`

Where

F is the future value (what we want to find after 11 years)

P is the present value, purchase price (20,300 given)

r is the rate of depreciation (r = 0.095)

t is the time in years ( t = 11)

Substituting, we solve for F:

`F=P(1-r)^t\\F = 20,300(1-0.095)^(11)\\F=20,300(0.905)^(11)\\F=6770.65`

Thus,

The value of the car would be around $6770.65, after 11 years