Question

7. A boat costs $16,600 and decreases in value by 14% per year. How much will the boat be worth after 11 years? A $3,159.30 B $2,717.00 C $16,446.00 D $70,155.46

Answer 1

Answer

Explanation

This type of depreciation follows compound interest and the value of the item after a period of time, t, is given as

A = P (1 - r)ᵗ

where

A = Amount or Value after a period of time = ?

P = Initial value of the item = $16,600

r = Rate of decrease = 14% = 0.14

t = time taken = 11

A = P (1 - r)ᵗ

A = 16,600 (1 - 0.14)¹¹

A = 16,600 (0.86)¹¹

A = 16,600 (