A car was purchased for $39150.00 and is expected to be worth $10800.00 in 9 years. Determine the rate at which the van depreciates in value.

The annual rate of depreciation of the car is 8.05% or 72.41/9

Step-by-step explanation:

1. Let's review the information given to us to answer the question correctly:

Price of the purchase of the car = $ 39,150

Price after 9 years = $ 10,800

2. Determine the rate at which the van depreciates in value.

Let's calculate what is the percentage of depreciation after 9 years, this way:

Percentage of depreciation after 9 years = [1 - (Price after 9 years/Price of the purchase of the car) ] * 100

Replacing with the values we know:

Percentage of depreciation after 9 years = [1 - (10,800/39,150) ] * 100

Percentage of depreciation after 9 years = [1 - 0.2759] * 100

Percentage of depreciation after 9 years = 72.41%

Annual rate of depreciation = 72.41/9 = 8.05%