Question

What is the value, after 7 years, of a 2014 Ford Mustang that originally costs $25,000.00 if it depreciates at a rate of 8% per year? Round your answer to the nearest thousand dollars.

Answer 1

Answer: the rounded value would be 14000

Explanation:

Answer 2

The value would be $14,000.

The formula we use is


`A=p(1+r)^t`

where A is the total amount, p is the initial value, r is the rate of depreciation written as a decimal number, and t is the amount of time. Since it is depreciation, our value of r is negative. Using our information, we have:

A=25000(1-0.08)⁷ = 25000(0.92)⁷ = 13946.17 ≈ 14000