Answer:
$
11093
Explanation:
Recall that the formula for compound interest is:
A
=
P
(
1
+
r/
n
)
n
(
t
)
−−−−−−−−−−−−−−−−−−−−−−
where:
A
= future value
P = principal (starting) amount
r = annual interest rate, expressed as a decimal
n = number of times the interest is compounded in a year
t = number of years compound interest occurs for
1
. Start by substituting your known values into the formula. Note that the annual interest rate is −
0.15 since the car depreciates (becomes lower in value) each year.
A
=
25000
(
1
+
−
0.15
1
)
1
(
5
)
2
. Solve for A
.
A
=
25000
(
0.85
)
)5
A
=
11092.63
¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯
A
≈
$
11093
a
−−−−−−−−−−−−−−−
