1.4k views
0 votes
The resale value of a bike decreases by 14% per year. A new bike is valued at $350. Approximate the resale value after 4 years to the nearest dollar.

1 Answer

4 votes

Answer: $‭191.45

Explanation:

This question requires the price of a bike in future so you can use the future value formula to calculate it:

Future value = Amount * (1 + rate)^ no. of periods

= 350 * (1 - 14%)⁴

= 350 * ‭0.54700816‬

= $‭191.45

The rate is subtracted from 1 instead of being added to represent that the value is decreasing not increasing.

User Viewsonic
by
3.5k points