Question

A vehicle purchased for $27,500 depreciates at a constant rate of 8%. Determine the approximate value of the vehicle 11 years after purchase. Round to the nearest whole dollar.

Answer 1

10990

Explanation:

We use the exponential equation

y = ab^x

where a is the inital value , b is the decay rate and x is the years

b = 1 - the depreciation rate

y = 27500 ( 1-.08)^ 11

27500 ( .92) ^11

10990.02789

To the nearest whole dollar

10990

Answer 2

$10,990

Explanation:

We can use the simple interest rate formula for this problem: A = P(1 - r)^t

All we need to do is plug in the known variables:

A = 27500(1 - 0.08)^11

You can calculate your answer using a calc and you should get $10,990 as your answer!