Question

Dan buys a car for £2700.

It depreciates at a rate of 1.4% per year.
How much will it be worth in 5 years?

Answer 1

The car will be worth £2516.22 in 5 years

Explanation:

The rule of depreciating is

`A=P(1-r)^(t)`, where

• A is the new value

• P is the original value

• r is the rate in decimal

• t is the time in years

∵ Dan buys a car for £2700

∴ P = 2700

∵ It depreciates at a rate of 1.4% per year

∴ r = 1.4% = 1.4/100 = 0.014

∵ We need to find how much it will be worth in 5 years

∴ t = 5

→ Substitute all of these values in the rule above to find A

∵
`A=2700(1-0.014)^(5)`

→ Use your calculator to find the answer

∴ A = 2516.22

∴ The car will be worth £2516.22 in 5 years