Question

A car with an initial valie of $20,000 is purchased. The value of the car decreases at a rate of 20% per year. Which equation represents the value of the car over time with t expressed in years?

Answer 1

Explanation:

The rate of decrease rate is exponential. We would apply the formula for exponential depreciation which is expressed as

A = P(1 - r)^ t

Where

A represents the value of the car after t years.

t represents the number of years.

P represents the initial value of the car

From the information given,

P = 20000

r = 20% = 20/100 = 0.2,

Therefore, the equation that represents the value of the car over time with t expressed in years is

A = 20000(1 - 0.2)^t

A = 20000(0.8)^t