Question

Henry bought a classic car in the year 2000. He believes that the value of the car depreciates exponentially at a rate of 4% each year. If the car was originally valued at $70,000, what should Henry expect the value of the car to be in 2012?

Answer 1

The value of the car in 2012 is $42,889.68

Depreciation is the decrease in the value of a property. It means that the value of the car would decrease each year.

In order to determine the value of the car after a period of time, use this formula:

FV = P (1 - r)^n

• FV = value of the car in 2012
• P = value of the car in 2000 = $70,000  
• R = rate of depreciation = 4%  
• N = number of years = 12 years

$70,000 x (1 - 0.04)^12  

$70,000 x (0.96)^12 = $42,889.68

A similar question was solved here: https://brainly.com/question/11560012