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

1 Answer

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Answer:

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

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