Question

A car depreciates at a rate of 20% per year. So, at the end ofeach year, the car is worth 80% of its value from the beginning of the year. What percent of its original value is the car worth at the end of the third year?

Answer 1

51.2%

Explanation:

Let's model this by a decreasing exponential function.

`f(x)=y times (0.8)^x`

Where `y` is the starting value of the car and `x` is the time elapsed in years since the year of purchase.

So after 3 years we have the following:

`f(3)= y times (0.8)^3`
`f(3)=0.512y`

So the car is only worth 51.2% of its original value after 3 years.