Comound interest: A car is bought for the price of £12 000, but its value depreciates every year by 8%. Calculate, how much will the car be worth in 5 years

The question states the value of the car depreciates every year by 8%. This means that from the original, 100% value of the car in a set year, every consecutive year the value will decrease by 8% so that the value of the car in the next year will be 92% the value of the original price in the first year. As a result, to find the value of the car in the next year, we deduce 8% from 100% and multiply it by 12000. We express 100% as 100/100 (=1) and 8% as 8/100 (=0.08) to facilitate calculations. In one year, the value of the car will be 12000 x (1 - 8/100), in other words, 12000 x 0.92, which equals 11040.Consequently, after the second year, to calculate the value, we take the cost of the car after one year and do the same: 11040 x 0.92We then repeat this 5 times. However, to avoid long calculations (as it is 5 years), we can simplify this by introducing the power of 5.We now take the original value of the car and multiply it by 0.92 which is also to the power of 5.12000 x (1 - 8/100)5 = 7908.978278 (or 7908.98 rounded to two decimal places)

Answered by Victoria B. Maths tutor

3851 Views

See similar Maths GCSE tutors

Related Maths GCSE answers

All answers ▸

The diameter of a ring is 19mm. Calculate the area of the ring in cm^2, giving the area to 3 significant figures.


There are 720 boys and 700 girls in a school. The probability that a boy chosen at random studies French is 2/3 The probability that a girl chosen at random studies French is 3/5 . Work out the number of students in the school who study French.


Given the ratio of x : y is 7 : 4 and x + y = 88. Work out the value of x – y


Find x: 4x + 7 = 27


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences