Question

vehicle, purchased for $5,000, depreciates at 10% per annum. What will be its value after 5 years? $2952

Answer 1

You can use the formula of annual compound interest in this case:

`A = P (1 + (r)/(n))^n^t`, where
A = the future value of the vehicle
P = the initial price of the vehicle
r = the deprecation rate (decimal)
n = the number of times price deprecate per year
t = the number of years

Now, for this case
`P = 5000`,
`r = -0.1`,
`t = 5` and
`n = 1`, so let's just replace corresponding variables and calculate the future value:

`A = 5000 * (1 + (-0.1)/(1))^5=5000*0.9^5=5000*0.59049=2952.45`

So, the vehicle's value will be $2952.45 after 5 years.