Question

The general equation for depreciation is given by y = A(1 – r)t, where y = current value, A = original cost, r = rate of depreciation, and t = time, in years. A car was purchased 6 years ago for $25,000. If the annual depreciation rate is 11%, which equation can be used to determine the approximate current value of the car?.

Answer 1

The equation which is used to determine the approximate current value of the car by the depreciation equation is,

$y=25000(0.89)^6$

What is depreciation?

Depreciation is to decrease in the value of a product in a period of time. This can be given as,

$y=A\left(1-{r}\right)^t$

Here,(y) is the current value, (A) is the original cost of the product, (r) is the rate of depreciation and (t) is the number of years.

Now the car was purchased 6 years ago. The original cost of the car is $25,000 and the annual depreciation rate is 11%.
The rate can be given as,

$r=\dfrac{11}{100}\\r=0.11$

Thus, to find the equation can be used to determine the approximate current value of the car, put the values in the above formula as,

$y=(25000)\left(1-{0.11}\right)^6\\y=25000(0.89)^6$

Hence, the equation which is used to determine the approximate current value of the car by the depreciation equation is,

$y=25000(0.89)^6$

Learn more about the depreciation here;

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