A vehicle purchased for $32500 depreciates at a constant rate of 9%. Determine the approximate value of the vehicle 10 years after purchase.

Answer 1

$3250. Constant rate of depeciation is applied to original cost times number of years. This result is then subtracted from original cost.

Answer 2

If a vehicle depreciates at a rate of 9%, that means the value of the vehicle the next year is 91% the value of the previous year. 91% = 100% - 9%

Therefore to find the value in 10 years we multiply 32500 by 0.91 raised to the 10th power.

32500 * (0.91^10) = 12656.02