A brand new car that is originally valued at $25,000 depreciates by 8% per year. What is the value o

Discussion in 'Calculator Requests' started by math_celebrity, Jun 14, 2017.

  1. math_celebrity

    math_celebrity Administrator Staff Member

    A brand new car that is originally valued at $25,000 depreciates by 8% per year. What is the value of the car after 6 years?

    The Book Value depreciates 8% per year. We set up a depreciation equation:
    BV(t) = BV(0) * (1 - 0.08)^t

    The Book Value at time 0 BV(0) = 25,000. We want the book value at time 6.
    BV(6) = 25,000 * (1 - 0.08)^6
    BV(6) = 25,000 * 0.92^6
    BV(6) = 25,000 * 0.606355
    BV(6) = 15,158.88
     

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