A $40 000 car depreciates at a rate of 13% per year.

Question

a) Write an equation to represent this situation.

b) Find the value of the car in 3 years.

c) How long does it take for the car to be worth half it's value?

Answer 1

future value=present value*(1-i)^time

present value=40000
i=.13

equation:
future value=40,000(.87)^t

value in three years: Put this in your google search window:
40000(.87)^3=

how long? take the log of each side:
log20,000=log40,000 + tLog.87
log20,000-log40,000=tlog.87
log(20/40=log(.5)=tlog.87

time=log(.5)/log.87
put this in your google search engine
log(.5)/log(.87) = and is should be rounded to the next year.

Answer 2

Thanks