Question

A corporate jet originally cost $17,550,000. If its value depreciates by 5 percent per year, what will its value be after 10 years? $10,507,833.28$7,042,166.72$8,775,000$10,774,177.60

Answer 1

We must determine the value of the corporate jet after 10 years with the conditions given in the problem

1. The initial cost is $17,550,000

2. If its value depreciates by 5 percent per year, r = 0.05

3. We must find its price in time, t = 10

The equation that we are using is as follows

$C(t)=C_0(1-r)^t$

Now we replace the values

$\begin{gathered} C(10)=17550000(1-0.05)^{10} \\ C(10)=17550000(0.95)^{10} \\ C(10)=10507833.28 \end{gathered}$

In conclusion, the plane will have a cost of $10,507,833.28 in 10 years