Question

You have purchased a mobile home for $20,000 which depreciates at 10% per year.

Answer 1

Answer:

  C.  Three

Step-by-step explanation:

We want to solve the equation for n:

  14,580 = 20,000(9/10)^n

  14580/20000 = 729/1000 = (9/10)^n

  (9/10)^3 = (9/10)^n . . . . . . write the left side as a cube

  3 = n . . . . . . equate exponents

After year 3, the value will be $14,580.

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You can use logarithms to find n:

  log(0.729) = n×log(0.9) . . . . . . taking the log of the 2nd line above

  log(0.729)/log(0.9) = n = 3