Question

A new car, valued at 28,000 depreciates at 9% per year. What is the value of the car one year after purchase

Answer 1

So there's 2 types of depreciation you often will come across, one is compound and one is simple.

For compound : A=P(1-i)^n

For simple A=P(1-in)

NOTE: A is amount after depreciation, P is amount before depreciation, n is number of years and i is the rate of depreciation.

Now if your depreciation is compound then:

A=P(1-i)^n

A=28000(1- 0.09)^1

A= 25480

If it's simple depreciation

A=P(1-in)

A= 28000(1- 0.09x1)

A= 25480

Now these are your solutions

Answer 2

$25,480

Explanation:

9% of 28,000 is 2,520. "Depreciates" means we must subtract. When we subtract this number from the initial value of the car which is 28,000 we get 25,480, which would be how much the car is worth after one year.

hope this helps!