Question

A new sports car sells for $40,000. The value of the car decreases by 12% annually. After how many years will it be worth half of its selling price

Answer 1

Answer:

n= 6.11 years

Explanation:

Giving the following information:

Present value= $40,000

Future value= $20,000

Decrease rate= 0.12

To calculate the number of years for the car to reach a value of $20,000; we need to use the following formula:

n= ln(FV/PV) / ln(1+i)

n= ln(20,000/40,000) / ln(1.12)

n= 6.11 years