Question

The original value of a car is $24,000. It depreciates 15% annually. What is its value in 4 years? $

Answer 1

Future Value = $ 12528.15

Explanation:

The depreciation is applied to the car annually. The value of the car after depreciation in "n" no. of years can be given by the following formula:

`Future\ Value = (Present\ Value)(1-depreciation\ rate)^n\\`

where,

Future Value = ?

Present Value = $ 24000

Depreciation Rate = 15% = 0.15

n = no. of years = 4

Therefore,

`Future\ Value = (\$ 24000)(1-0.15)^4`

Future Value = $ 12528.15