Trish bought a new car at a cost of $40,000. The car depreciates approximately 12% of its value each year. What will the car's value be in five years?
To calculate the car's value in five years, we first need to find out how much it depreciates each year. We know that the car depreciates approximately 12% of its value each year.
In order to find the new value after each year, we need to subtract the depreciation amount from the previous year's value.
Let's calculate the depreciation and the car's value after each year:
Year 1:
Depreciation amount = 12% of $40,000 = $4,800
Car's value after Year 1 = $40,000 - $4,800 = $35,200
Year 2:
Depreciation amount = 12% of $35,200 = $4,224
Car's value after Year 2 = $35,200 - $4,224 = $30,976
Year 3:
Depreciation amount = 12% of $30,976 = $3,717.12
Car's value after Year 3 = $30,976 - $3,717.12 = $27,258.88
Year 4:
Depreciation amount = 12% of $27,258.88 = $3,271.06
Car's value after Year 4 = $27,258.88 - $3,271.06 = $23,987.82
Year 5:
Depreciation amount = 12% of $23,987.82 = $2,878.54
Car's value after Year 5 = $23,987.82 - $2,878.54 = $21,109.28
Therefore, the car's value in five years will be approximately $21,109.28.