Question

The original value of a car is $15,000, and it depreciates (loses value) by 20% each year. What is the value of the car after three years?

Answer 1

The value of the car after `3` years is `$7680.00`

Explanation:

Original value , `V_0 = $15000` , depriciation rate is `r=20/100=0.2` ,period , `t=3` years

`V_3=? ; V_3 = V_0(1-r)^t= 15000*(1-0.2)^3` or

`V_3= 15000*(0.8)^3= 7680.00`

The value of the car after `3` years is `$7680.00` [Ans]