Question

The value of a dirt bike decreases by 20% each year. If you purchased this dirt bike today for $500, to the nearest dollar how much would the bike be worth 5 years later?

Answer 1

The price of bike after 5 year in nearest dollars is $ 164

Explanation:

We have formula

`A=P(1-R)^t`

Where

A= Price of dirt bike after t years

P= Initial price of bike

R= rate of decrease

t= time in years

It is given that the price of dirt bike today is $ 500, and its price is decreasing by 20% each year. We need to find the price after 5 years

So we have

P = $500

R = 20 % = 0.2

t= 5 years

now we plug these values in the formula, so we have the price of dirt bike after 5 years is given by

`A = 500(1-0.2)^5`

`A= 500(0.8)^5\\A= 500(0.32768)\\A= 163.84`

Hence the price of bike after 5 year in nearest dollars is $ 164

Answer 2

The value of the bike after a year becomes only 80% of the value a year ago. In this given, the initial amount $500 should be multiplied by 80% 5 times. The answer would be $163.84. Thus, after 5 years the dirt bike would only be $163.84.