Colin buys a car for £28100. It depreciates at a rate of 4% per year. How much will it be worth in 6 years? Give your a

Question

Colin buys a car for £28100.
It depreciates at a rate of 4% per year.
How much will it be worth in 6 years?
Give your answer to the nearest penny where appropriate.

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Thạch Thảo 5 months 2021-08-23T10:52:36+00:00 1 Answers 5 views 0

Answers ( )

    0
    2021-08-23T10:53:56+00:00

    Answer:

    The amount the car will be worth after 6 years is £21,917 and 22 pence

    Step-by-step explanation:

    The amount for which Colin buys the car, PV = £28,100

    The amount by which the car depreciates each year, r = 4%

    The number of years after which the value of the car is sought, n = 6 years

    The future value, FV, based on an annual depreciation is given as follows;

    FV = PV \times \left ( 1 + \dfrac{r}{100} \right ) ^n

    Substituting the known values gives;

    FV_6 = 28,000 \times \left ( 1 - \dfrac{4}{100} \right ) ^6 =  21,917.22

    Therefore, the amount the car will be worth after 6 years, future value FV₆ = £21,917 and 22 pence

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