Question

what is the value after 7 years of a car that originally costs $25,000 rate if it depreciates at a rate of 8% per year ?round your answer to the nearest dollar.​

Answer 1

The value of the car after 7 years of depreciation is $13,946.

In order to solve this question you need to start out with the original cost of the car and then subtract 8% of the current value each year.

After each year is the 8% depreciate amount and then the value of the car at the end of that year:

1 - $25,000 x 8% = $2,000. - $25,000 - $2,000 = $23,000

2 - $23,000 x 8% = $1,840. - $23,000 - $1,840 = $21,160

3 - $21,160 x 8% = $1,692.80. - $21,160 - $1,692.80 = $19,467.20

4 - $19,467.20 x 8% = $1,557.38. - $19,467.20 - $1,557.38 = $17,909.82

5 - $17,909.82 x 8% = $1,432.79 - $17,909.82 - $1,432.79 = $16,477.03

6 - $16,477.03 x 8% = $1,318.16. - $16,477.03 - $1,318.16 = $15,158.87

7 - $15,158.87 x 8% = $1,212.71. - $15,158.87 - $1,212.71 = $13,946.16