Question

A product initially with a value of $24,000 has been depreciating at 9% p.a. over 3 years. What is its current value? $ 21,840.00 $ 21,040.68 $ 18,253.54 $ 18,085.70

Answer 1

$ 18,085.70

Step-by-step explanation

The formula we have to use to find the value of a product which value depreciates over time is:

`y=a(1-r)^t`

Where a is the initial value, r is the depreciation rate and t is the time in years.

In this problem we have a = 24000, r = 0.09 and t = 3:

`\begin{gathered} y=24,000\cdot(1-0.09)^3 \\ y=24,000\cdot0.91^3 \\ y=24,000\cdot0.753571 \\ y=18,085.704 \end{gathered}`