A 1998 Pontiac Grand-Am depreciates in value by 18% on average each year.

A 1998 Pontiac Grand-Am depreciates in value by 18% on average each year. If the car originally sold for $19995 in 1998, how much would the car be worth in 2012?

Answer:

Amount of car in 2012 = $1,242.55 (Approx)

Step-by-step explanation:

Given:

Rate of depreciation(d) = 18% = 0.18

Amount of car in 1998 = $19,995

Find:

Amount of car in 2012

Computation:

Number of year(n) = 14 year

Amount\ of\ car\ in\ 2012 = Amount\ of\ car\ in\ 2012 [1-d]^n

Amount of car in 2012 = 19,995[1-0.18]¹⁴

Amount of car in 2012 = 19,995[0.82]¹⁴

Amount of car in 2012 = 19,995[0.0621432458]

Amount of car in 2012 = 1,242.5542

Amount of car in 2012 = $1,242.55 (Approx)

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