Question

Colin buys a car for £15500.

It depreciates at a rate of 1% per year.
How much will it be worth in 4 years?
Give your answer to the nearest penny where appropriate.

Answer 1

£14889.30

Explanation:

The cost of the car = £15500.

For the first year,

depreciation = £15500 x 1%

= £155

Its worth after the first year = £15500 - £155

= £15345

For the 2nd year,

depreciation = £15345 x 1%

= £153.45

Its worth after the second year = £15345 - £153.45

= £15191.55

For the 3rd year,

depreciation = £15191.55 x 1%

= £151.9155

Its worth after the third year = £15191.55 - £151.9155

= £15039.6345

For the 4th year,

depreciation = £15039.6345 x 1%

= £150.3963

Its worth after the fourth year = £15039.6345 - £150.3963

= £14889.2382

Thus, the worth of the car in 4 years would be £14889.30