Question

A car valued at £18000 at the start of 2017, depreciated in value by 5% each year for 3 years. How much did it lose in value over this period?

Answer 1

Answer:

The amount lost over the 3 years s 2567.25£  

Explanation:

$\mathrm{F}=\mathrm{I} \times\left(1-\left(\frac{r}{100}\right)\right)^{\mathrm{n}}$

where F = final value after n years

I = initial value of the car in 2017 = £18000 (given)

Since the value is depreciated 5% every year for 3 years,

r = percentage rate of depreciation = 5% (given)

n = 3 years

Substituting these values in formula, we get

$\mathrm{F}=18000 \times\left(1-\frac{5}{100}\right)^{3}$

= $18000 \times\left(\frac{95}{100}\right)^{3}$

 = 15432.75£ which is the value of the car after 3 years

Finally 18000-15432.75 = 2567.25£ is the amount lost over this period.