Question

A compact car depreciates at 15% per year. Six years ago it was purchased for $21,000. What is it worth now?

A) $2,107.50
B) $7,000.50
C) $3,937.50
D) $5,047.50

Answer 1

The value of the compact car after six years is $7,000.50.

Step-by-step explanation:

To calculate the current value of the compact car, we need to find the depreciated value after six years. The value of the compact car after six years is $7,000.50. Since the car depreciates at a rate of 15% per year, we can calculate the value after each year by multiplying it by 0.85 (100% - 15%).

So, after six years, the car's value would be:

Value = $21,000 * (0.85)^6 = $7,000.50

Therefore, the car is worth $7,000.50 now. So, the correct answer is B) $7,000.50.