Question

Jessica recently purchased her dream car a Porsche 911. for $55,000. the value of this car will depreciate by 8% each year. Find the value of the car after 5 years.

55,000(0,92)^5= $36,249.

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Answer 1

The future value of the car after 5 years is $36,249.5

Explanation:

Given the value at which a car depreciates, we are interested in finding the value of the car after a period of 5 years.

To find the value, we make use of an exponential equation;

The exponential equation to use is;

FV = PV(1 - r)^n

where FV is the future value of the car which is what we want to calculate

PV is the present value of the car which is $55,000

r is the depreciation percentage = 8% = 8/100 = 0.08

n is the number of years.

So now, we input these values into the formula;

FV = 55,000(1 -0.08)^5

FV = 55,000(0.92)^5

FV = $36,249.5