Question

Alex purchased a new car for $28,000. The car's value depreciates 7.25% each year. What will be the value of the car 5 years after it is purchased? Round your answer to the nearest dollar.

Answer 1

For this there are two options. The quick way or the slower way. I will show you both :)
Because the car is decreasing in value you subtract 7.25 from 100.
100-7.25 =92.75 Therefore
$28,000 x 0.9275 = $25,970
$25,970 x 0.9275 = $24,087.175
$24,087.175 x 0.9275 = $22,340.85481
$22,340.85481 x 0.9275 = $20,721.14284
$20,721.14284 x 0.9275 = $19,218.85998 --> $19,219 after 5 years.

Or, the quicker way
$28,000 x 0.9275^5 = $19,218.85998 --> $19,219

You do the 0.9275 to the power of 5 because that's the number of years the question has specified.
Hope this helped, if you have any more questions please feel free to ask me :)