Question

If you bought a car five years ago for $15,000 and today you can sell for $7000 what was its rate of depreciation

Answer 1

Answer:

The rate of depreciation of the car is 14%

Step-by-step explanation:

The price of car purchased 5 years ago = 15000

The price of car sold = 7000

By compound depreciation,

$Pn = P (1 - R/100) ^ T$  ... (1)

where Pn = 7000

P = 15000

R = rate of interest to be calculated

T = 5 ( number of years)

substituting the values in equation (1), we get

$7000 = 15000 (1 - R/100) ^ 5$

$0.46 = (1 - R/100) ^ 5$

$0.858 = 1 - R/100$

0.858 is rounded off as 0.86

R/100 = 0.14

By simplifying the above equation, we get

Rate of depreciation = 14%