Question

a boat costs 11,850 and decreases in value by 10% per year. how much will the boat be worth after 8 years

Answer 1

If the boat initially cost $11850 and INCREASED in value by 10% per year, we'd calculate the final value like this:

V = $11850(1+0.10)^8

But if the boat is losing value (depreciating) over time, we'd calculate its final value like this:

V = $11850(1-0.10)^8  =  $11850(0.90)^8 = $11850(0.4305) = $5101.04 (answer)