Question

Automobiles start laoing value, or depreciating as soon as they leave the car dealership. five years ago, a family purchased a new car that cost 16,490 if the car lost 13% of its value each year, what is the value of the car now

Answer 1

Use exponential decay: V = 16490*(1 - 0.13)^5 = 16490*(0.87)^5.

(0.87)^5 ≈ 0.49842092, so
V ≈ 16490 * 0.49842092 ≈ $8,218.96.

The car is worth about $8,218.96 now.