Penelope purchases a car for $7,565. The car depreciates at a rate of 14% annually. How much is the car worth in six years?

Write an exponential function for the situation above.
Use your equation to determine how much the car is worth in six years.

1 answer

To express the depreciation of the car as an exponential function, we can use the formula:

\[ V(t) = V_0 \times (1 - r)^t \]

where:

  • \( V(t) \) is the value of the car after \( t \) years,
  • \( V_0 \) is the initial value of the car,
  • \( r \) is the depreciation rate,
  • \( t \) is the number of years.

In this case:

  • \( V_0 = 7565 \) (the purchase price of the car),
  • \( r = 0.14 \) (the depreciation rate of 14%),
  • \( t = 6 \) (the number of years).

Putting these values into the formula gives:

\[ V(t) = 7565 \times (1 - 0.14)^t \]

This simplifies to:

\[ V(t) = 7565 \times (0.86)^t \]

Now, we want to find the value of the car after 6 years, so we set \( t = 6 \):

\[ V(6) = 7565 \times (0.86)^6 \]

Calculating \( (0.86)^6 \):

\[ (0.86)^6 \approx 0.5277 \]

Now, substituting this back into our equation:

\[ V(6) \approx 7565 \times 0.5277 \approx 3994.48 \]

Thus, the worth of the car after 6 years is approximately $3,994.48.