Question

On average, a car will depreciate by about 21% of its value each year. If anew car costs $20,000, which equation can be used to find theapproximate number of years, n, the car takes to reach a value of $7,790?

Answer 1

The formula for the final value of an object after n years with decrease in cost at rate of r% per year is,

$FV=IV(1-\frac{r}{100})^n$

Determine the relation between initial value and final value of car.

$\begin{gathered} 7,790=20,000(1-\frac{21}{100})^n \\ 7,790=20,000(0.79)^n \end{gathered}$

Last option is correct.