Question

Lydia bought a car for $20,000. it is expected to depreciate at a rate of 10% per year. what will be the value of the car in 2 years? use the formula y=a(1-r) and round to the nearest dollar.

answers:
a. 19,980
b. 16,000
c.16,300
d. 18050

Answer 1

Using the formula y = a(1 - r), where

y is the value of the car after 2 years,

a is the initial value of the car, which is $20,000, and

r is the rate of depreciation, which is 10% or 0.1 per year,

we can calculate the value of the car in 2 years as:

y = 20,000(1 - 0.1)^2

y = 20,000(0.9)^2

y = 20,000(0.81)

y = 16,200

Therefore, the value of the car in 2 years will be $16,200, which is closest to option C, 16,300.