Keaton bought a new Jeep for $32,000. The value of the car will depreciate at a rate of 8.5% per year. Growth or decay? What will the car be worth in 5 years? When will the car be worth half of what Carson paid?
Accepted Solution
A:
Part a)
Price of car is $32,000 and the value of Car is depreciating at a rate of 8.5% per year. This means the worth of car is decreasing. Hence it is a decay.
Part b) Worth of car in 5 years.
Current Price = P = $32000 Decay rate = r = 0.085 Time = t = 5 years