Question

Dan buys a car for £2100.

It depreciates at a rate of 2.2% per year.
How much will it be worth in 6 years?
Give your answer to the nearest penny where appropriate.

Answer 1

£1837.5

Explanation:

Given data

Cost of car P= £2100.

Rate r= 2.2%

Time t= 6 years

Now we want to find the worth after 6 years, let us apply the compound interest expression but this time for depreciation

A= P(1-r)^t

Substitute

A= 2100(1-0.022)^6

A= 2100*(0.978)^6

A= 2100*0.875

A= £1837.5

Hence the amount of the car after 6 years is £1837.5