Question

In the formula, v=L(1-

d.n, l is the purchase price, in dollars, of the automobile and the expression (1-
d.n is known as the decay factor. A car purchased for 21,000 has a decay factor of 0.7. What is the present value of the car

Answer 1

The value of the the car is given by:
V=L(1-d.n)
thus, the value of v when L=$21000 and d.n=0.7 will be:
V=21000(1-0.7)
V=21000×0.3
V=$6300

Answer: Present value of the car is $6300