Question

Car 1 cost $22,600 when new and depreciated 14% each year for 5 years. The same year, Car 2 cost $17,500 when new and depreciated 7% each year for 5 years. What was the difference in the values of the two cars after 5 years to the nearest dollar? a. $1543 b. $12175 c. $10,631 d. $5100

Answer 1

Hi there
To find the value of the car after 5 years use the formula of
A=p (1-r)^t
A future value
P present value
R rate of depreciation
T time

Let's first find the value of car 1 after 5 years
A=22,600×(1−0.14)^(5)
A=10,631.65

Second find The value of car 2
A=17,500×(1−0.07)^(5)
A=12,174.55

So the difference
12,174.55−10,631.65=1,542.9
Round your answer to get 1543

Good luck!