Question

Which vehicles are worth less than $3,000 a decade after purchasing new? Select all that apply.

Coupe: $15,435 MSRP, depreciates at an average rate of 14% per year
Wagon: $19,285 MSRP, depreciates at an average rate of 17% per year
Convertible: $20,599 MSRP, depreciates at an average rate of 18% per year
Sport: $26.875 MSRP, depreciates at an average rate of 19% per year
Crossover: $31.500 MSRP. depreciates at an average rate of 22% per year

Answer 1

Explanation:

To determine which vehicles are worth less than $3,000 a decade after purchasing new, we need to calculate the approximate value of each vehicle after 10 years, based on its MSRP and average depreciation rate.

Using the given information, we can calculate the approximate value of each vehicle after 10 years as follows:

Coupe: After 10 years, the coupe's value would be approximately $15,435 * (1 - 0.14)^10 = $3,002. Therefore, the coupe would not be worth less than $3,000 a decade after purchasing new.

Wagon: After 10 years, the wagon's value would be approximately $19,285 * (1 - 0.17)^10 = $2,823. Therefore, the wagon would be worth less than $3,000 a decade after purchasing new.

Convertible: After 10 years, the convertible's value would be approximately $20,599 * (1 - 0.18)^10 = $2,816. Therefore, the convertible would be worth less than $3,000 a decade after purchasing new.

Sport: After 10 years, the sport's value would be approximately $26,875 * (1 - 0.19)^10 = $4,237. Therefore, the sport would not be worth less than $3,000 a decade after purchasing new.

Crossover: After 10 years, the crossover's value would be approximately $31,500 * (1 - 0.22)^10 = $4,285. Therefore, the crossover would not be worth less than $3,000 a decade after purchasing new.

So, the vehicles worth less than $3,000 a decade after purchasing new are the Wagon and Convertible.