Question

The equation representing the value of the car after 3 years can be expressed as v = $27,000 * (1 - 0.06)³, where v is the value of the car.

A) $23,481.60
B) $25,452.00
C) $28,098.00
D) $31,654.40

Answer 1

The value of the car is $25,452.00

Therefore, correct option is B) $25,452.00

Step-by-step explanation:

The expression
`\(v = $27,000 * (1 - 0.06)^3\)` represents the value of the car after 3 years. To find the value, substitute the given values and calculate. In this case,
`\(v \approx $25,452.00\)`. Therefore, option B is the correct answer.

To calculate the future value, the initial value is multiplied by the compound interest formula
`\((1 - \text{interest rate})^{\text{number of years}}\)`. In this scenario, the initial value is $27,000, the interest rate is 6%, and the time is 3 years.

Understanding compound interest formulas is crucial in finance, especially when assessing the depreciation or appreciation of assets over time.

Therefore, correct option is B) $25,452.00