Question

Alex purchased a new car for $28000. The car depreciates 7.25% each year. what will the price be in 5 years?

Answer 1

Use the depreciation formula.


`\sf p(1-r)^n`

Where 'p' is the principal value, 'r' is the rate it depreciates, and 'n' is the time. Just plug in what we know:


`\sf 28000(1-0.0725)^5`

Simplify by subtracting:


`\sf 28000(0.9275)^5`

Simplify the exponent:


`\sf 28000(0.6864)`

Multiply:


`\sf\approx\boxed{\sf\$ 19219.20}`