Question

3. If you buy a new car for $6,000 which depreciates at 4%/year,

what will the value be after 3 years?

Answer 1

$5,308.42

Explanation:

(see attached for reference)

recall that the formula for Depreciation

is given by

A = P ( 1 - r)^t,

where

A = final amount

P = principal amount = given as $6,000

r = depreciation rate = given as 4% = 0.04

t = time in years = given as 3,

Simply substitute these into the equation to get:

A = P ( 1 - r)^t

= 6000( 1 - 0.04) ^ 3

= 6000 (0.96)^3

= $5,308.42