Question

A vehicle purchased for $25000 depreciates at a constant rate of 5% per year. Determine the approximate value of the vehicle 12 years after purchase. Round to the nearest whole number.​

Answer 1

$13,509.

Explanation:

After each year the vehicle is worth 95% of the previous value.

95% = 0.95.

So after 12 years the approximate value

= 25000 * 0.95^12

= $13,509.