Question

A car purchased new depreciates in value by an average of 20% over the first five years.

a.
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The Subaru Impreza (a respectable, reliable car) pictured at left is currently available for
pickup at Bob Baker Subaru in Carlsbad for $20,009.00. To make life easier let's just round it
to $20,000.00. Assuming average use and wear and tear and a loss of 20% each year, how
much will the car be worth after 5 years?
Complete the table and graph (using Desmos and importing the graph here)
Year (x)
Starting value (y)
20% of value
Ending value
OL 3 w tu
Desmos Graph

Answer 1

$6553.6

Explanation:

The current worth of the car = $20,000

The car depreciate 20% every year

In five years, the worth of the car is ?

First year,

20% of $20,000 = 0.2 * $20000 = $4000

The value of the car after the first year = $20000 - $4000 = $16000

Second year,

20% of $16,000 = 0.2 * $16000 = $3200

The value of the car after the second year is $16000 - $3200 = $12800

Third year,

20% of $12800 = 0.2 * $12800 = $2560

The value of the car after the third year is $12800 - $2560 = $10,240

Fourth year,

20% of $10,240 = 0.2 * 10,240 = $2048

The value of the car after the fourth year is $10,240 - $2048 = $8192

Fifth year,

20% of $8192 = 0.2 * $8192 = $1638.4

The value of the car after the fifth year is $8192 - $1638.4 = $6553.6