Question

The original value of a car is $18,000, and it depreciates (loses value) by 15% each year. what is the value of the car after three years?

Answer 1

I think the answer would be 11,054.25$

Answer 2

If the original value of a car is $18,000, and it loses value by 15% each year, then you can calculate the new value of the car after n years using following formula:

$P=\ 18,000\cdot (1-0.15)^n.$  

When n=3, then

$P=\ 18,000\cdot (1-0.15)^3=\ 18,000\cdot 0.85^3=\ 11,054.25.$  

Answer: the value of the car after 3 years is $11,054.25.