Question

Rich is comparing the cost of maintaing his car with the depreciating value of the car. When will the cost and value be the same

Answer 1

Complete question:

Rich is comparing the cost of maintaining his car with the depreciation value of the car.

The value starts at $20,000 and decreases by 15% each year. The maintanance cost is $500 the first year and increases by 28% per year.

When will the maintenance cost and the value be the same.

Answer:

9 years

Step-by-step explanation:

Depreciation is modeled by an exponential function :

A = p(1 - r)^t [decrease, '-']

A = 20,000(1 - 0.15)^t

A = 20000(0.85)^t - - - (1)

Maintainace cost :

A = p(1 + r)^t ; [increase, '+']

A = 500(1 + 0.28)^t

A = 500(1.28)^t - - - (2)

Equating (1) and 2

20000(0.85)^t = 500(1.28)^t

1.28^t / 0.85^t = 20000/500

(1.28 / 0.85)^t = 40

Take log of both sides

Log (1.28 / 0.85)^t = log 40

t * 0.1777910 = 1.6020599

t = 1.6020599 / 0.1777910

t = 9.01

t = 9 years