Question

A vehicle purchased for $29,800 depreciates at a constant rate of 5%. Determine the approximate value of the vehicle 12 years after purchase. Round to the nearest dollar.

a) $10,600
b) $17,900
c) $15,000
d) $8,600

Answer 1

The approximate value of the vehicle 12 years after purchase is $11,920.

Step-by-step explanation:

To determine the approximate value of the vehicle 12 years after purchase, we need to calculate the depreciation using the constant rate of 5%.

Step 1: Calculate the annual depreciation rate. 5% of $29,800 is $1,490.

Step 2: Multiply the annual depreciation rate by the number of years (12). $1,490 x 12 = $17,880.

Step 3: Subtract the total depreciation from the original purchase price. $29,800 - $17,880 = $11,920.

Therefore, the approximate value of the vehicle 12 years after purchase is $11,920.