Question

A new truck that sells for $25,000 depreciates (decreases in value) 11% each year. What will be the value of the truck in 2 years

Answer 1

Price of Truck after 2 year = $ 19802.50

Explanation:

Given: Price of truck = $ 25,000

Price depreciate at rate of 11% in a year

To find: Price of truck after 2 years

If we let Price of truck to be P = $ 25000

And Rate of deprecation to be R = 11%

And time to be n = 2

now by using formula of deprecation, we get

`A=P*(1-(R)/(100))^n`

`A=25000*(1-(11)/(100))^2`

`A=25000*0.7921`

A = $ 19802.50

Therefore, Price of Truck after 2 year = $ 19802.50

Answer 2

Original price =$25,000
Depreciation rate = 11%

Note that 1 - 0.11 = 0.89.
Value after 1 year = $25,000 (0.89) = $22,250
Value after 2 years = $22,250 (0.89) = $19,802.50

Answer: $19,802.50