Question

The value of a motorcycle is depreciating by 2.8% each year. If the bike was purchased for $12,000, how much will it be worth in 12 years?

Answer 1

$9,024

Explanation:

Formula - \[ \text{Future Value} = \text{Initial Value} \times (1 - \text{Depreciation Rate})^{\text{Number of Years}} \]

- Initial Value: $12,000

- Depreciation Rate: 0.028

- Number of Years: 12

Plug in values:

Future Value = $12,000 * (1 - 0.028)^12

Let's calculate this step by step:

1. Subtract the depreciation rate: 1 - 0.028 = 0.972.

2. Raise this result to the power of 12: 0.972^12 = 0.752.

3. Multiply this result by the initial value: 0.752 * $12,000 = $9,024.