Question

Colin buys a car for £28100.

Answer 1

Answer:

The amount the car will be worth after 6 years is £21,917 and 22 pence

Step-by-step explanation:

The amount for which Colin buys the car, PV = £28,100

The amount by which the car depreciates each year, r = 4%

The number of years after which the value of the car is sought, n = 6 years

The future value, FV, based on an annual depreciation is given as follows;

$FV = PV \times \left ( 1 + \dfrac{r}{100} \right ) ^n$

Substituting the known values gives;

$FV_6 = 28,000 \times \left ( 1 - \dfrac{4}{100} \right ) ^6 = 21,917.22$

Therefore, the amount the car will be worth after 6 years, future value FV₆ = £21,917 and 22 pence