Question

A car's value depreciates at a rate of 20%

each year. If you paid $20,000 for this car 6

years ago, what is the current value of your

car?

y = a(1 - r)^t

Answer 1

Given that

a=20,000

r=20%

t=6yrs

Using

$y = a(1-r)^t$

$y = 20000(1- \frac{20}{100})^6 = 20000(0.8)^6 = 2×10^4 × 8^6×10^{-6} = 5242.88$

The current value of the car is $5,242.88