Question 1028744
wrong.


he buys the car for 20,000


each year the car decreases in value by 18%.


so next year the value of the car is 20,000 - .18*20,000.


factor out the common term of 20,000 and you get 20,000 * (1 - .18


simplify this to get 20,000 * .82.


your common factor will be .82.


the car is worth 20,000 in 2007
you want to know how much the car is worth in 2012.


2012 - 2007 = 5 years.


the formula for compound value is f = p * (1+r)^n


in your case, p = 20,000.
r = -.18
n = 5


the equation becomes f = 20,000 * (1 - .18)^5 which becomes:


f = 20,000 * .82^5 which becomes:


f = 7,414.796864


the car will be worth 7,414.796864 in 5 years.



you can do the yearly calculations and you'll get the same answer.


start with 20,000 in 2007.
in 2008, the value of the car is 20,000 - .18 * 20,000 = 16,400.
in 2009, the value of the car is 16,400 - .18 * 16,400 = 13,448.
in 2010, the value of the car is 13,448 - .18 * 13,448 = 11,027.36
in 2011, the value of the car is 11,027.36 - .18 * 11,027.36 = 9,042.44.
in 2012, the value of the car is 9,042.44 - .18 * 9,042.44 = 7414.80.


that's the same as the answer we got above after rounding to 2 decimal digits.