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

3856 Views

See similar Maths GCSE tutors

Related Maths GCSE answers

All answers ▸

Solve the following simultaneous equations. x^2 + 2y = 9, y = x + 3


Adam is going to get a loan of £ 720 to help pay for the holiday. Adam will have to pay back the £ 720 plus interest of 15 %. He will pay this back in 12 equal monthly installments. How much money will Adam pay back each month?


How do I expand brackets?


Find and simplify the point(s) of intersection of the curves: x^2 + y^2 =6 , y = x - 3


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