Question

A car is purchased for $27,000. After each year, the resale value decreases by 30%. What will the resale value be after 4 years?

Answer 1

The resale price is -$5,400 meaning the car is worthless after 4years.

Explanation:

Resale value=$27,000-{($27,000÷100)×30}×4

Resale value=$27,000-{($270)}×30×4

Resale value=$27,000-{8,100}×4

Resale value=$27,000-$32,400

Resale value= -$32,000

Answer 2

the resale value of the car after 4 years will be approximately $6,482.70

Explanation:

To calculate the resale value of the car after 4 years, given that the resale value decreases by 30% each year, we can use the following formula for exponential decay:

Resale Value = Initial Value × (1 - Rate of Decay)^Number of Years

Given:

Initial Value = $27,000

Rate of Decay = 30% or 0.30

Number of Years = 4

Plugging in these values:

Resale Value = $27,000 × (1 - 0.30)^4

Resale Value = $27,000 × (0.70)^4

Resale Value = $27,000 × 0.2401

Resale Value ≈ $6,482.70