Question

Henry bought a classic car in the year 2000 he believes that the value the car depreciates us exponentially at a rate of 4% each year if the car was originally valued at $70,000 what should Henry expect the value of the car to be in 2012

Answer 1

Henry should expect the value of the car to be approximately $38,595.56 in 2012.

Explanation:

To calculate the expected value of the car in 2012, which is 12 years after Henry bought it in 2000, given that it depreciates exponentially at a rate of 4% each year, you can use the formula for exponential depreciation:

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

In this case:

Initial Value (the original value of the car) = $70,000

Depreciation Rate = 4% or 0.04 (expressed as a decimal)

Number of Years = 2012 - 2000 = 12

Plug these values into the formula:

Value = $70,000 × (1 - 0.04)^12

Value = $70,000 × (0.96)^12

Now, calculate the value:

Value ≈ $38,595.56