Question

17 Malory purchased a car for $21,825. It depreciates about 5.8% each year. What is the value of the car after six years?

$15,249.64
$14,229.90
$30,610.35
$21,199.67

Answer 1

$15,249.64

Explanation:

Depreciation means it is losing value.

Original price = 21,825

Depreciation rate (as a negative) = -5.8% or -0.058 as a decimal

Total duration n = 6

FV = Original price (1+r)^n

Next, plug in the numbers into the equation;

FV = 21,825 (1-0.058)^6

FV =21,825 *0.698723607

FV= 15,249.6427