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If a car's value depreciates by 10% each year, what will be its value after 3 ye

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Question: If a car\'s value depreciates by 10% each year, what will be its value after 3 years if its current value is $20,000? (2023)

Options:

$14,580
$15,000
$16,000
$18,000

Correct Answer: $14,580

Exam Year: 2023

Solution:

After 1 year: $20,000 * 0.9 = $18,000; After 2 years: $18,000 * 0.9 = $16,200; After 3 years: $16,200 * 0.9 = $14,580.

If a car's value depreciates by 10% each year, what will be its value after 3 ye

Practice Questions

Q1

If a car's value depreciates by 10% each year, what will be its value after 3 years if its current value is $20,000? (2023)

$14,580
$15,000
$16,000
$18,000

Questions & Step-by-Step Solutions

If a car's value depreciates by 10% each year, what will be its value after 3 years if its current value is $20,000? (2023)

Step 1: Start with the current value of the car, which is $20,000.
Step 2: Calculate the value after 1 year by multiplying $20,000 by 0.9 (which represents a 10% depreciation). This gives you $18,000.
Step 3: Calculate the value after 2 years by multiplying the value after 1 year ($18,000) by 0.9. This gives you $16,200.
Step 4: Calculate the value after 3 years by multiplying the value after 2 years ($16,200) by 0.9. This gives you $14,580.

Depreciation – Understanding how the value of an asset decreases over time, specifically through a percentage reduction each year.
Exponential Decay – Applying the concept of exponential decay where the value decreases by a constant percentage annually.
Multiplicative Calculation – Performing successive multiplicative calculations to determine the final value after multiple periods.

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