Question 540067
Yes. He should buy the car. Here's why: the value of the car at the end of each year is 20% less than it was the year before. NOT 20% less of the original value. His friend did the WRONG math of 
100%-(4*20%)=20%
The correct math is to say that each year the car is worth 20% less than the previous year. 100%-20%=80% of the previous year. So the true value of the car is not 20% but rather:
{{{100((.8)^4)}}}% or 40.96% of the original value.
Let's put some numbers to that so you can see what that means. Say the car originally cost $20,000. Barry's friend is selling it for 20% of that amount:
{{{20000*0.20=4000}}}
When the true value of that car is 40.96% of the original amount:
{{{20000*.04096=8192}}}
Would you pay $4,000 for a car worth $8,192? I would!