Question

Help please

A car was valued at $35,000 in the year 1990. The value depreciated to $15,000 by the year 2000.

A) What was the annual rate of change between 1993 and 2000?
r= ---------- Round the rate of decrease to 4 decimal places.

B) What is the correct answer to part A written in percentage form?
r= ------------%

C) Assume that the car value continues to drop by the same percentage. What will the value be in the year 2004 ?

value = $ ------------- Round to the nearest 50 dollars.

Answer 1

Changed answer because commenter said it was incorrect ....Now, I will use years 1993 and 2000 instead of 1990 and 2000

Explanation:

You need to use an exponential formula:

FV = PV ( 1-r)^n r = decimal rate of change n = years (7 yrs)

FV = future value = 15000 PV = present value = 35000

15000 = 35 000 ( 1-r)^7 <====solve for r

15/35 = (1-r)^7 take 7th root of both sides

.8860 = 1-r so r = .1140

A) r = .1140

B) 11.40%

C) n = 11 FV = 35 000 (1 - .1140)^11 = $ 9243.12

D) $ 9250 rounded