Question

A car is purchased for $23,000. After each year, the resale value decreases by 30%. What will the resale value be after 3 years?

Answer 1

Each year, the resale value drops by 30% of the original value, in which case

$21,000-(30%*21,000*5)=$21000–31,500=-10500, you have to pay someone ten thousand five hundred dollars to tow the car away

OR

Each year the resale value drops by 30% of last year’s value, in which case

21,000-(21,000*.3)=21,000*.7=14700 first year value

14700*.7=12900 second year value

12900*.7=7203 third year value

7203*.7=5042.1 fourth year value

5042.1*.7=3529.47 fifth year value

That’s also 21000*.7^5, or to put it another way, 21000*0.16807

Round to nearest, $3529 dollars