Question

You purchase a car for $36,000. You did some research and found that this particular model of car depreciates in value by around 15% per year. What is the value of your car after 6 years?

Answer 1

$13,578.80

Explanation:

If the car depreciates by 15% per year, then its value at the end of each year is 85% of its value at the beginning of that year. We can use this fact to calculate the value of the car after 6 years:

Year 0: $36,000 (initial value)

Year 1: $36,000 x 0.85 = $30,600

Year 2: $30,600 x 0.85 = $26,010

Year 3: $26,010 x 0.85 = $22,108.50

Year 4: $22,108.50 x 0.85 = $18,792.23

Year 5: $18,792.23 x 0.85 = $15,973.89

Year 6: $15,973.89 x 0.85 = $13,578.80

Therefore, the value of the car after 6 years is approximately $13,578.80.