Question

A car purchased in 2014 was worth $21,000. It has depreciated at an annual rate of 8.5%. what will its value be in 2021?

Round answer to the nearest penny (100th)

Answer 1

Answer: The value of the car in 2021 will be $11,276.31.

Explanation:

If r is the depreciation rate and P is the initiial amount , then the amount after t years is given by:-

`A=P(1-(r)/(100))^t`

Given: P=21000, r=8.5% , t= 2021-2014= 7

Plug all the values in the formula, we get

`A= 21000(1-(8.5)/(100))^7\\\\\Rightarrow\ A=21000(1-0.085)^7\\\\\Rightarrow\ A= 21000(0.915)^7\\\\\Rightarrow\ A= 21000(0.5369670)\approx11276.31`

The value of the car in 2021 will be $11,276.31.