Question

a. You bought a car 5 years ago for $30,000. This type of car is known...

a. You bought a car 5 years ago for $30,000. This type of car is known to depreciate at a compounded annual rate of 8% per year (given normal mileage and wear-and-tear). If your car depreciated at this rate, how much is it worth today? (Hint: let r = -0.08 and solve for FV).

c. If you deposit $1000 today in an account earning 10% APR compounded annually, and you deposit another $1000 next year (at same rate), and finally you deposit another $1000 two years from today (at time t=2). How much will be in your account two years from today, at time t=2?

d. You bought a car worth $30,000 that is expected to depreciate at a rate of 12% per year, compounded annually. For how many years will the car be worth more than $10,000?

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Answer #1

a)

Hence, Car worth in 5 years was $32,954.08 or $32,954

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