Question

my ferrari 458 is depleting in value and is only worth $165000 in today's market. if the value of the car is steadily depreciating at 3% compounded semi annually, how much will it be worth in 4.5 years

Answer 1

$144015.76 approx.

Step-by-step explanation:

Depreciation is the fall in the value of an asset due to wear and tear and efflux of time. Motor vehicles i.e movable assets usually depreciate more in comparison to equipment.

Book Value as on today = $165000

Rate of depreciation = 3% percent i.e 1.5% semi annually

Time period = 4.5 years × 2 = 9 periods

A =
`P(1\ -\ (r)/(100)) ^(n)`

where, A = Book value at a future date

P= Book value as on today

r= rate of interest semi annually

n = time period

A =
`165000(1\ -\ (1.5)/(100)) ^(9)`

A = 165000 ×
`(0.985)^(9)`

A = 165000 × 0.8728

A = $144,015.76 approx.