Question

Dan buys a car for £2,200 it depreciates at a rate of 0.5% per year how much would it be worth in 6 years

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Answer 1

Given:

The initial value of car = £2,200

Depreciation rate = 0.5%

To find:

The worth of car after 6 years.

Solution:

Exponential decay model:

`y=a(1-r)^t`

Where, a is the initial value, r is the rate of depreciation and t is number of years.

Putting a=2200, r=0.005 and t=6, we get

`y=2200(1-0.005)^6`

`y=2200(0.995)^6`

`y=2200(0.9703725)`

`y=2134.8195`

`y\approx 2134.82`

Therefore, the worth of the car after 6 years is £2134.82.