Question

You bought a car that was $25500 and the value depreciates by 4.5% each year.

How much will the car be worth after 5 years?

How much after 8 years?

Answer 1

(a) 20256.15625

(b) 17642.78546

Explanation:

(a) There's a formula for this problem y = A(d)^t where, A is the initial value you are given, d is the growth or decay rate and t is the time period. So, in this case, as the car cost is decreasing it is a decay problem and we can write the formula as such; y = A(1-R)^t

So, in 5 years the car will be worth, 25500(1-4.5%)^5 or 20256.15625 dollars

(b) And after 8 years the car will be worth 25500(1-4.5%)^8 or 17642.78546 dollars.