A vehicle purchased for $25,000 depreciates at a constant rate of 5%. Determine the approximate value of the vehicle 11 years after purchase. Round to the nearest whole dollar.
Depreciation at 5% means it retains 95% of the value. Set up the depreciation equation to get Book Value B(t) at time t.
B(t) = $25,000 * (1 - 0.05)^t
Simplifying, this is:
B(t) = $25,000 * (0.95)^t
The problem asks for B(11)
B(11) = $25,000 * (0.95)^11
B(11) = $25,000 * 0.5688
B(11) = $14,220
Depreciation at 5% means it retains 95% of the value. Set up the depreciation equation to get Book Value B(t) at time t.
B(t) = $25,000 * (1 - 0.05)^t
Simplifying, this is:
B(t) = $25,000 * (0.95)^t
The problem asks for B(11)
B(11) = $25,000 * (0.95)^11
B(11) = $25,000 * 0.5688
B(11) = $14,220