Problema Solution
A car is purchased for $20,000 . After each year, the resale value decreases by 20% . What will the resale value be after 3 years?
Answer provided by our tutors
after one year, the car is worth $20000(1-.20), or $20000(.8), or $16000
after two years, the car is worth $16000(.80), or $12800
after 3 years, the car is worth $12800(.80), or $10240
In general, the equation for the resale value of the car is 20000(.80)n where n is the number of years. .80 represents 80% and comes from subtraction 20%, or .20 from the total.