What is the value, after 7 years, of a 2014 Ford Mustang that originally costs $25,000.00 if it depreciates at a rate of 8% per year? Round your answer to the nearest dollar.
The formula to calculate depreciation is:
Value after depreciation = Original value * (1 - depreciation rate)^number of years
Plugging in the numbers:
Value after depreciation = $25,000.00 * (1 - 0.08)^7
Value after depreciation = $25,000.00 * (0.92)^7
Value after depreciation = $25,000.00 * 0.560596207
Value after depreciation = $14,014.91
Rounded to the nearest dollar, the value of the 2014 Ford Mustang after 7 years would be $14,015.