Question

You buy a used car for $20,000. It depreciates at the rate of 20% per year.

What is the value of the truck after 4 years?

Answer 1

The value of the used car after 4 years is $6,553.60.

Step-by-step explanation:

To calculate the value of the car after 4 years, we need to apply the depreciation rate of 20% per year.

First, we calculate the value of the car after the first year by subtracting 20% (0.20) of the initial value from it: $20,000 - (0.20 * $20,000) = $16,000.

Next, we apply the depreciation rate for the remaining 3 years. Each year, we multiply the previous year's value by 0.20:

1. $16,000 * 0.20 = $3,200
2. $12,800 * 0.20 = $2,560
3. $10,240 * 0.20 = $2,048

Finally, we subtract the depreciation amount from the previous year's value to calculate the value after each year:

• After 1 year: $16,000 - $3,200 = $12,800
• After 2 years: $12,800 - $2,560 = $10,240
• After 3 years: $10,240 - $2,048 = $8,192
• After 4 years: $8,192 - $1,638.40 = $6,553.60