A car is purchased for 27,000$. After each year the resale value decreases by 20%. What will the resale value be after 3 years?
If it decreases by 20%, it holds 100% - 20% = 80% of the value each year. So we have an equation R(t) where t is the time after purchase:
R(t) = 27,000 * (0.8)^t
The problem asks for R(3):
R(3) = 27,000 * (0.8)^3
R(3) = 27,000 * 0.512
R(3) = 13.824
If it decreases by 20%, it holds 100% - 20% = 80% of the value each year. So we have an equation R(t) where t is the time after purchase:
R(t) = 27,000 * (0.8)^t
The problem asks for R(3):
R(3) = 27,000 * (0.8)^3
R(3) = 27,000 * 0.512
R(3) = 13.824