Question

Laura buys a new car for £14600.

The annual rate of depreciation is 20%.
How much is the car worth after 3 years?

Answer 1

To find out how much the car is worth after 3 years with a 20% annual depreciation rate, you can use the following formula:

Value after depreciation = Initial Value × (1 - Depreciation Rate)^Number of Years

In this case:

Initial Value = £14,600

Depreciation Rate = 20% (0.20 as a decimal)

Number of Years = 3

Plug these values into the formula:

Value after depreciation = £14,600 × (1 - 0.20)^3

Value after depreciation = £14,600 × (0.80)^3

Value after depreciation = £14,600 × 0.512

Value after depreciation = £7,487.20

So, the car is worth approximately £7,487.20 after 3 years with a 20% annual depreciation rate.