Henry bought a classic car in the year 2000. He believes that the value of the car depreciates exponentially at a rate of 4% eac
h year. If the car was originally valued at $70,000, what should Henry expect the value of the car to be in 2012?
1 answer:
The value of the car in 2012 is $42,889.68
Depreciation is the decrease in the value of a property. It means that the value of the car would decrease each year.
In order to determine the value of the car after a period of time, use this formula:
FV = P (1 - r)^n
- FV = value of the car in 2012
- P = value of the car in 2000 = $70,000
- R = rate of depreciation = 4%
- N = number of years = 12 years
$70,000 x (1 - 0.04)^12
$70,000 x (0.96)^12 = $42,889.68
A similar question was solved here: brainly.com/question/11560012
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