Question

Ninas car exponentially depreciate at a rate of 8% per year. If Nina bought the car when it was 6 years old for 12,045 , what was the original price

Answer 1

Answer: $19,864.60

Explanation:

The future value formula could have been used to find the price in the 6th year. As we now know the price, the formula can now be used to find the original price.

Price at 6th year = Original price * ( 1 + rate) ^ number of years

12,045 = Og * ( 1 - 8%) ⁶

12,045 = Og * 0.606355001344

Og = 12,045 / 0.606355001344

Og = $19,864.60

Rate is subtracted because price was reducing.