Posted by ben! on Monday, October 23, 2006 at 11:40am.
a new car depreciate by 20% in its first year. Each succeding year its depreciate by 10% assume the car is still good working condition after ten years. if the car costs $25000, calculate the value of the car after 10 years?
At 0 yrs, the value is $25000
After 1 year it is only 80% of its first value = 0.8 * 25000 = $20000
After 2 years it is worth 90% of its value at 1 yr = 0.9*20000 = $18000
After 3years it is worth 90% of its value at 2 yrs= 0.9*18000 = $16200
After 4 years it is worth 90% of its value at 3 yrs = 0.9*16200 = $14580
After 5 yrs value =$13122
After 6 yrs value =$11809.80
After 7 yrs value =$10628.82
After 8 yrs value =$ 9565.93
After 9 yrs value = $ 8609.34
After 10 yrs value = $7748.40
my question is is there an eaiser way to figure this question out like a formula I would use? and is my answer correct?
Is there an easier (or more convenient way) to calculate this? Yes, just look at how your calculations are progressing
Yr 1 Value = Price - 20% = P*.8
Yr 2 Value = P*.8*.9
Yr 3 Value = P*.8*.9*.9=P*.8*.92
Yr 4 Value = P*.8*.93
Yr n Value = P*.8*.9n-1
For the 10th
year it would be
Yr 10 Value = P*.8*.99
Are your answers correct? I'll let you answer that.
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