Question

Sam buys a new tent for $866. He knows that the value of the tent will depreciate 12% each year. How much will it be worth in 3 years? Give your answer to two decimal places.

Answer 1

After one year, the value of the tent will be worth 100% - 12% = 88% of its original value.

After two years, the value of the tent will be worth 88% - 12% = 77.44% of its original value.

After three years, the value of the tent will be worth 77.44% - 12% = 68.1472% of its original value.

To find out how much the tent will be worth in 3 years, we can use the following formula:

Value after 3 years = original value x (1 - depreciation rate)^number of years

Value after 3 years = $866 x (1 - 0.12)^3 = $518.98

Therefore, the tent will be worth $518.98 in 3 years.

Answer 2

Explanation:

If the value of the tent depreciates by 12% each year, then its value at the end of each year is 100% - 12% = 88% of its value at the beginning of the year.

So after the first year, the value of the tent will be:

$866 x 0.88 = $761.28

After the second year, the value of the tent will be:

$761.28 x 0.88 = $670.58

After the third year, the value of the tent will be:

$670.58 x 0.88 = $590.99

Therefore, the tent will be worth $590.99 in 3 years, to two decimal places.