Alex purchased a new car for 28,000. The cars value depreciates 7.25% each year. What will be value of the car 5 years after it is purchased? Round your answer to the newest dollar
Accepted Solution
A:
If depreciation is 7.25% per year, then the common factor is (1-0.0725), or 0.9275.
Thus, the car's value after 5 years will be:
V = $28000(0.9275)^5 = $28000(0.6864) = $19218.86, or (to the nearest dollar) $19218 (answer)