To calculate the book value of the car at the end of 3 years, we can apply the depreciation formula for each year. The car depreciates by 30% of its value each year, which means it retains 70% of its value.
- Initial Value: $25,000
- Depreciation Rate: 30% (which means it retains 70% of its value)
The formula for the value at the end of each year is:
\[ \text{Value at end of year} = \text{Value at start of year} \times (1 - \text{depreciation rate}) \]
Year 1:
\[ \text{Value at end of Year 1} = 25000 \times (1 - 0.30) = 25000 \times 0.70 = 17500 \]
Year 2:
\[ \text{Value at end of Year 2} = 17500 \times (1 - 0.30) = 17500 \times 0.70 = 12250 \]
Year 3:
\[ \text{Value at end of Year 3} = 12250 \times (1 - 0.30) = 12250 \times 0.70 = 8575 \]
Thus, the book value of the car at the end of 3 years is $8,575.