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12 votes
12 votes
The value of a car is decreasing by 14% per year. If the car is worth 11,000 today, what will it be worth in two years?

User YaFred
by
2.8k points

1 Answer

17 votes
17 votes

For us to be able to determine the worth of the car in two years, we will be using the depreciation formula:


\text{ FV = PV(1 - }(r)/(100))^n

Where,

PV = Current value of the car

r = rate of interest

n = number of years

FV = Future value

Given:

PV = 11,000

r = 14%

n = 2 years

We get,


\text{ FV = PV(1 - }(r)/(100))^n
\text{= (11,000)(1 - }(14)/(100))^2
\text{= (11,000)(1 - }0.14)^2
\text{= (11,000)(}0.86)^2
\text{= (11,000)(}0.7396)
=\text{ 8,135.60}

Therefore, the answer is 8,135.60

User Akif
by
2.6k points
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