Question 225565
A car depreciates by 30% the first year and 12% per year afterward. How much will a $25000 car be worth after 5 years?


Step 1.  30% means 0.30 and 12% means 0.12.


Step 2.  Let {{{P=25000}}} the initial price of car.


Step 3.  Let {{{P1=(1-0.3)*25000}}} be dollar value of car after first year.


Step 4.  Let {{{P2=(1-.12)*(1-0.3)*25000}}} be dollar value of car after second year. Also, {{{P3=(1-.12)*(1-.12)*(1-0.3)*25000=(1-0.12)^2*(1-0.3)*25000}}} after third year


Step 5.  Then {{{P5=(1-0.12)^4*(1-0.3)*25000}}} be the dollar value of car after 5 years.


{{{P5=0.88^4*.7*25000=10494.67}}}


Step 6.  ANSWER:  The dollar value of the car after 5 years is $10,494.67.


I hope the above steps were helpful.


For FREE Step-By-Step videos in Introduction to Algebra, please visit http://www.FreedomUniversity.TV/courses/IntroAlgebra and for Trigonometry visit http://www.FreedomUniversity.TV/courses/Trigonometry.


And good luck in your studies!


Respectfully,
Dr J

http://www.FreedomUniversity.TV