Question

A used truck is purchased for $20,000 . The next year, the value of the car is $16,000, and the following year it drops to $12,800. It then lowers to $10,240 the year after that. The owner wants to determine the way in which the car is depreciating.

Answer 1

20%

Explanation:

To determine the way in which the car is depreciating, we can analyze the pattern of the decreasing values over time. Let's calculate the percentage decrease in value from one year to the next: From $20,000 to $16,000: Percentage decrease = ((20000 - 16000) / 20000) * 100 = 20% From $16,000 to $12,800: Percentage decrease = ((16000 - 12800) / 16000) * 100 = 20% From $12,800 to $10,240: Percentage decrease = ((12800 - 10240) / 12800) * 100 = 20% We observe that the value of the truck is decreasing by 20% each year. This indicates a constant percentage decrease in value over time, which is known as straight-line depreciation. In this case, the truck is depreciating by 20% of its value each year.