Question

5 . In 1990, a family bought a new car for $20,000. The car decreases in value 25% every year. What is the car worth in 2000? Y= a (1 + r) (Fill'in answer choices for a r and t.)

Answer 1

$1,126.27

1) Gathering the data

1990

$20,000

Value decreases 25% yearly since then each year the car price worths 0.75% of the prior year.

2) Let's subtract 2000-1990 = 10 years. So the value of that brand new car 10 years later will be given by this exponential formula

$\begin{gathered} y=20,000(1-0.25)^n \\ y=20,000(0.75)^{10} \\ y=1126.27 \end{gathered}$

3) So the car worths $1,126.27 10 years later.