# A new car depreciates at a rate of 15% per year. What is the expected value of a $25,000 car after 5 years (rounded to nearest whole dollar)? A) $20750 B) $11093 C) $9429 D) $6250

##### 1 Answer

Mar 27, 2016

#### Explanation:

Recall that the formula for compound interest is:

#color(blue)(|bar(ul(color(white)(a/a)A=P(1+r/n)^(n(t))color(white)(a/a)|)))# where:

#A=# future value

#P=# principal (starting) amount

#r=# annual interest rate, expressed as a decimal

#n=# number of times the interest is compounded in a year

#t=# number of years compound interest occurs for

#A=25000(1+(-0.15)/1)^(1(5))#

#A=25000(0.85))^5#

#A=11092.63#

#color(green)(|bar(ul(color(white)(a/a)A~~$11093color(white)(a/a)|)))#