Question

Dustin wants to purchase a used car that had a sticker price of $23,400 brand new. The car is currently 3 years old. What is its current value using the rule of thumb that a vehicle loses 15% of its current value each year?
$16,906
$12,214
$19,890
$14,370

Answer 1

To calculate the current value of the car after 3 years using the rule of thumb that a vehicle loses 15% of its value each year, you can follow these steps:

1. Determine the initial value of the car, which is $23,400.
2. Calculate the value after each year by reducing it by 15% of its value at the start of that year.

Here's the step-by-step calculation:

- **After Year 1**:
\[
\text{Value} = 23,400 - (0.15 \times 23,400) = 23,400 - 3,510 = 19,890
\]

- **After Year 2**:
\[
\text{Value} = 19,890 - (0.15 \times 19,890) = 19,890 - 2,983.5 = 16,906.5
\]

- **After Year 3**:
\[
\text{Value} = 16,906.5 - (0.15 \times 16,906.5) = 16,906.5 - 2,536.0 = 14,370.5
\]

After rounding, the value of the car after 3 years is approximately **$14,370**.

Thus, the correct answer is **$14,370**.