Question

A car cost $20,000 when it was purchased. The value of the car decreases by 8% each year. Find the rate of decay each month and select the correct answer below.
−0.006924%


−0.006667%


−0.666667%


−0.6924%

Answer 1

Monthly rate of growth = x
then
(1+x)^12 = 100%-8%
(1+x) = (0.92)^(1/12)=0.9930756
=>
x=0.9930756-1=-0.0069244 = -0.69244%