Problema Solution
An automobile for $24,000 is worth $2,500 after 5 years. Assuming that the car's value depreciated steadily from year to year, what was it worth at the time end of the third year?
Answer provided by our tutors
purchase price: Vo = $24,000
the salvage value: V= $2,500
age of the automobile: n = 5 years
the amount that the car depreciates per year: D
V = Vo - Dn
D = (Vo - V)/n
D = (24,000 - 2,500)/5
D = $4,300
Lets find V for n = 3 years:
V = 24,000 - 4,300*3
V = $11,100
at the end of the third year the car was worth $11,100.