SOLUTION: Amanda bought a truck for $20,000. The value of the truck depreciates by 7 percent each year. How much will the truck be worth after 6 years? Round your answer to the nearest cent

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Question 1142181: Amanda bought a truck for $20,000. The value of the truck depreciates by 7 percent each year. How much will the truck be worth after 6 years? Round your answer to the nearest cent
Found 2 solutions by Theo, Alan3354:
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
the formula to use is f = p * (1 + r) ^ n

f is the future value
p is the present value
r is the interest rate per time period
n is the number of time periods

in your problem, you get:

p = 20,000
r = minus .07 per year
n = 6 years

formula becomes f = 20,000 * (1 - .07) ^ 6.

solve for f to get f = 12939.80367

round to the nearest cent to get 12939.80.

note that if you gain 7% per year, then the interest rate is positive and when you lost 7%, the interest rate is negative.

you can graph this formula as shown below.

$$$


Answer by Alan3354(69443) About Me  (Show Source):
You can put this solution on YOUR website!
Amanda bought a truck for $20,000. The value of the truck depreciates by 7 percent each year. How much will the truck be worth after 6 years? Round your answer to the nearest cent
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Its value is 93% of the previous year = 0.93
---> 20000*(0.93)^6 after 6 years.