In order to buy a new car, you finance $20,000 with no down payment for a term of five years at an APR (Annual Percentage Rate) of 6%.

After you have the car for one year, you are in an accident. No one is injured, but the car is totaled.
The insurance company says that before the accident, the value of the car had decreased by 25% over the time you owned it, and the company pays you that depreciated amount after subtracting your $500 deductible.
How much money does the insurance company pay you? (Don't forget to subtract the deductible.)

V = 20,000 - 0.25*20,000 = 15,000 = Value after 1 yr.

15,000 - 500 = $14,500. = Amt. paid by Ins.

reply Henry there is no interest rate in your calculation

To calculate the amount of money the insurance company pays you after deducting your deductible, follow these steps:

Step 1: Calculate the depreciation value of the car before the accident:
Original car value = $20,000
Depreciation percentage = 25%
Depreciation amount = Original car value * Depreciation percentage
Depreciation amount = $20,000 * 0.25
Depreciation amount = $5,000

Step 2: Calculate the value of the car after depreciation:
Car value after depreciation = Original car value - Depreciation amount
Car value after depreciation = $20,000 - $5,000
Car value after depreciation = $15,000

Step 3: Subtract the deductible from the car value after depreciation:
Insurance payout = Car value after depreciation - Deductible
Insurance payout = $15,000 - $500
Insurance payout = $14,500

Therefore, the insurance company will pay you $14,500 after subtracting the $500 deductible.

To calculate the amount of money the insurance company pays you after the accident, we need to follow these steps:

Step 1: Calculate the depreciation value of the car after one year.
The insurance company states that the car's value has depreciated by 25% over the time you owned it. Since you owned it for one year, we can calculate the depreciated value as follows:
Depreciation value = 25% of $20,000
Depreciation value = 0.25 * $20,000
Depreciation value = $5,000

Step 2: Calculate the car's value after depreciation.
The car's value after depreciation would be the initial value ($20,000) minus the depreciation value ($5,000) we calculated in step 1:
Value after depreciation = $20,000 - $5,000
Value after depreciation = $15,000

Step 3: Subtract the deductible from the value after depreciation.
The deductible is $500, so we subtract it from the value after depreciation:
Insurance payout = Value after depreciation - Deductible
Insurance payout = $15,000 - $500
Insurance payout = $14,500

Therefore, the insurance company pays you $14,500 after subtracting the deductible.