You purchase a new car for $35,000. The value of the car depreciates at a rate of 8.5% per year. If the rate of decrease continues, what is the value of your car in 5 years?
Set up the depreciation function D(t), where t is the time in years from purchase. We have:
D(t) = 35,000(1 - 0.085)^t
Simplified, a decrease of 8.5% means it retains 91.5% of it's value each year, so we have:
D(t) = 35,000(0.915)^t
The problem asks for D(5)
D(5) = 35,000(0.915)^5
D(5) = 35,000(0.64136531607)
D(5) = $22,447.79
Set up the depreciation function D(t), where t is the time in years from purchase. We have:
D(t) = 35,000(1 - 0.085)^t
Simplified, a decrease of 8.5% means it retains 91.5% of it's value each year, so we have:
D(t) = 35,000(0.915)^t
The problem asks for D(5)
D(5) = 35,000(0.915)^5
D(5) = 35,000(0.64136531607)
D(5) = $22,447.79