SOLUTION: A vehicle purchased for $20,700 depreciates at a constant rate of 5%. Determine the approximate value of the vehicle 12 years after purchase. Round to the nearest whole dollar.

Algebra ->  Finance -> SOLUTION: A vehicle purchased for $20,700 depreciates at a constant rate of 5%. Determine the approximate value of the vehicle 12 years after purchase. Round to the nearest whole dollar.       Log On


   

Question 1176659: A vehicle purchased for $20,700 depreciates at a constant rate of 5%. Determine the approximate value of the vehicle 12 years after purchase. Round to the nearest whole dollar.
Found 2 solutions by ikleyn, Solver92311:
Answer by ikleyn(52772) About Me  (Show Source):
You can put this solution on YOUR website!
.

There are two commonly accepted ways to consider / solve the problems on depreciated values.



One way is to consider a linear model with the slope coefficient m = -0.05.



Another way is to consider exponential decrease of the depreciated value with the multiplication coefficient of (1- 0.05) = 0.95.



In the first case, the depreciate value of the car after 12 years is

    V = 20700 - 0.05*20700*12 = 8,280 dollars.



In the second case, the depreciate value after 12 years is

    V = 20700%2A0.95%5E12 = 11,185 dollars.


Answer by Solver92311(821) About Me  (Show Source):
You can put this solution on YOUR website!




You can do your own arithmetic.


John

My calculator said it, I believe it, that settles it

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