Question

A new car sells for $27,500. The value of the car decreases by 14% annually. You want to sell the car when it's worth about $4000. Explain how many years you will keep the car, when you will sell it, and how you determined your answer.

Answer 1

13 years

Explanation:

4000 = 27500 × (1 - 14/100)^t

4000 = 27500 × 0.86^t

0.86^t = 8/55

t ln(0.86) = ln(8/55)

t = 12.78248711

Answer 2

The formula would be:

27500 x (1 - 14/100)^year = 4000

=> (86/100)^year = 4000/27500

=> 0.86^year = 0.145

=> year = log(0.145)/log(0.86) = 12.8

Hope this helps!

:)