Question

A vehicle purchased for $20,700 depreciates at a constant rate of 7%. Determine the approximate value of the vehicle

Answer 1

Answer:

$0

Step-by-step explanation:

(assuming straight line depreciation)

Recall that,

Depreciation Rate (%) = (Annual Depreciation / Initial Cost ) x 100%

or,

Annual Depreciation = Depreciation Rate x Initial Cost

Given that depreciation rate = 7% = 0.07 and the initial cost was $20,700,

Annual Depreciation = 0.07 x $20,700 = $1,449

Also recall that the following formula also applies:

Annual Depreciation = (Initial Cost - Final Value) / time

given that time is 15 years and the initial cost and annual depreciation is given above,

1449 = (20,700 - Final Value) / 15

(15)(1449) = 20,700 - Final Value

Final Value = 20,700 - (15)(1449)

Final Value = 20,700 - 21,753

Final Value = -$1,035

So we see that after 15 years, the car ends up with a negative value, (basically means the car has no value).

The nearest whole dollar to a negative dollar is simply zero

hence the approx value of the car is zero $0

Answer 2

Answer:

$22,000

Step-by-step explanation:

So, we would multiply 20,700 and 7%. That equals to 1,449

Then we would multiply 1,449 and 15 that equals 21,735.

SO after 15 years it will be worth 21,735

But then we would round it up, because it is above 500.

So the total value rounded up will be $22,000

Hope this helps!