A vehicle purchased for $ 20700 depreciates at a constant rate of 5 % . Determine the approximate value of the vehicle 14 years after purchase.

Answer 1

Depreciation at a constant percent is exponential decay:

V(t) = V₀·(1-rate)^t

1. V(t) is the value at year t (we want t = 14 years)
2. V₀ is the starting value = $20,700
3. rate is the depreciation rate expressed as a decimal = 0.05
4. t = years = 14

V(14) = $20700·(1 - 0.05)¹⁴

Use your calculator to get the answer. Round your answer to the nearest cent, The units are $$.