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A new car is purchased for 24900 dollars. The value of the car depreciates at 6.5% per year. To the nearest year, how long will it be until the value of the car is 14200 dollars?

1 Answer

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Answer: it will take 8 years.

Explanation:

We would apply the formula for exponential decay which is expressed as

A = P(1 - r)^ t

Where

A represents the value of the after t years.

t represents the number of years.

P represents the initial value of the car.

r represents rate of decay.

From the information given,

P = 24900 dollars

A = 14200 dollars

r = 6.5% = 6.5/100 = 0.065

Therefore

14200 = 24900(1 - 0.065)^t

14200/24900 = (0.935)^t

0.5701 = (0.935)^t

Taking log of both sides to base 10

Log 0.5701 = log0.935^t = tlog0.935

- 0.22 = t × - 0.0292

t = - 0.22/- 0.0292

t = 8 years

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