compound interest the answer I got is 5,062.6 which I believe is wrong

Question

Compound interest

a company bought a van that had a value of £12,000.

Each year the value of the van depreciates by 25%.

Work out the value of the van at the end of three years.

Answer 1

You're only off by .10

At the end of each year the van is

worth 75% of what it was the previous year.

Value = 12000(.75)ⁿ where is the number

of years.

12000(.75³) = 5062.50

 

 

Answer 2

V(t) = V₀(1 - r)^t

• V(t) = the van's value after t years
• V₀ = the van's initial value = 12,000
• r = rate of depreciation (decimal) = 25% = 0.25
• t = years

 

V(3) = (12,000)(1 - 0.25)³

V(3) = (12,000)(0.75)³

V(3) = (12,000)(0.421875)
V(3) = 5062.50 pounds sterling

 

Looks as if you got the right answer (except for the decimal part)