Aria buys a new car for $34,104. She learns that every year her car will depreciate in value by 18%. Aria tracks how much her car is worth over time.

Question

Explain what the worth of Aria’s car will be compared to the previous year based on it’s depreciation rate. (1 pts)

Answer 1

Aria's car will lose 18% of its value each year due to depreciation. This means that at the end of each year, the car will be worth 82% (which is 100% - 18%) of its value from the previous year.

To illustrate, if we denote the car's value at the beginning of a year as V, then at the end of that year, the car's value will be calculated as:

\[ \text{New Value} = V \times 0.82 \]

This indicates that each year, the car's worth will be decreased to 82% of what it was the previous year. Consequently, after each year, the car will be worth significantly less than it was the year before due to the cumulative effects of the annual depreciation.