Question

Jeremy buys a car for £9500 in 2022.

The car depreciates in value by 10.5% each year.
How much will the car be worth in 2025?

Answer 1

£6810.72

Explanation:

If the car decreases in value by 10.5% each year, then it is 89.5% of the previous year's value since 100% - 10.5% = 89.5%

Convert the percentage into decimal form:

89.5% = 89.5/100 = 0.895

Using the formula:

`y=ab^x`

where y is the amount the car is worth, a is the initial amount in 2022, b is the decay factor (in decimal form), and x is the time (in years)

`\implies y=9500(0.895)^x`

To find x: 2025 - 2022 = 3

`\implies y=9500(0.895)^3=6810.715063...`

So the car will be worth £6810.72 in 2025