Question 950511: A car was purchased for $3,495 and will depreciate 20% each year. How much will the car be worth after 5 years? Max gets excited and yells out that the car will not be worth anything after 5 years. Include in this teaching assignment whether or not Max is correct. Explain why or why not. If not, find the actual percent the car would depreciate after 5 years.
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! A car was purchased for $3,495 and will depreciate 20% each year. How much will the car be worth after 5 years? Max gets excited and yells out that the car will not be worth anything after 5 years. Include in this teaching assignment whether or not Max is correct. Explain why or why not. If not, find the actual percent the car would depreciate after 5 years.
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Each year the car was worth 80% of it's previous years value.
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After 5 years of depreciation the car was worth (0.8)^5*3495
= 0.32768*3495 = $1145.24
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Percent of depreciation = 1145.24/3495 = 32.77%
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Cheers,
Stan H.
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