A car is purchased for US$24.000. After each year, the resale value decreases by 20%. What will the resale value be after 4 years?
Question
A car is purchased for US$24.000. After each year, the resale value decreases by 20%. What will the resale value be after 4 years?
Solution
Sure, let's break it down step by step.
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Initial Value: The car is purchased for US$24,000.
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Annual Depreciation: The resale value decreases by 20% each year. This means the car retains 80% of its value each year.
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First Year:
- Resale value after 1 year = Initial value × 0.80
- Resale value after 1 year = 24,000 × 0.80 = 19,200
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Second Year:
- Resale value after 2 years = Resale value after 1 year × 0.80
- Resale value after 2 years = 19,200 × 0.80 = 15,360
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Third Year:
- Resale value after 3 years = Resale value after 2 years × 0.80
- Resale value after 3 years = 15,360 × 0.80 = 12,288
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Fourth Year:
- Resale value after 4 years = Resale value after 3 years × 0.80
- Resale value after 4 years = 12,288 × 0.80 = 9,830.40
So, the resale value of the car after 4 years will be US$9,830.40.
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