A vehicle purchased for $25000 depreciates at a constant rate of 4% per year. Determine the approximate value of the vehicle 13 years after purchase
To determine the approximate value of the vehicle 13 years after purchase, we need to calculate the depreciation amount for each year and subtract it from the original purchase price.
The depreciation amount for each year is given by the formula: depreciation = original value * depreciation rate
First, we need to convert the depreciation rate from percentage to decimal form: 4% = 4/100 = 0.04
So, the depreciation amount for each year is: depreciation = $25000 * 0.04 = $1000
Now, we can calculate the approximate value of the vehicle 13 years after purchase:
Approximate value = original value - depreciation amount * number of years
Approximate value = $25000 - $1000 * 13
Approximate value = $25000 - $13000
Therefore, the approximate value of the vehicle 13 years after purchase is $12,000.