Question

You purchase a car for $40,582 in 2015 that has a history of depreciating at 12% each year. If you want to see the car for no less than $8,000, in what year should you sell?

Answer 1

Exponential decay model for the given case will be: 8000=40582*(1-0.12)^(t) where t is the number of years it will take to reach 8000. (8000/40582)=0.88^(t) log(8000/40582)=t*log(0.88) t=log(0.197132)/log(0.88) t=12.7 Hence the car has to be sold before August 2028.