You purchase a car for $40,582 in 2015 that has a history of depreciating at 12% each year. If you want to see the car for no less than $8,000, in what year should you sell?

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Mathematics

Hana Carr

16 April, 15:24

You purchase a car for $40,582 in 2015 that has a history of depreciating at 12% each year. If you want to see the car for no less than $8,000, in what year should you sell?

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Ramon Bryan · Answer 1

Exponential decay model for the given case will be: 8000=40582 * (1-0.12) ^ (t) where t is the number of years it will take to reach 8000. (8000/40582) = 0.88^ (t) log (8000/40582) = t*log (0.88) t=log (0.197132) / log (0.88) t=12.7 Hence the car has to be sold before August 2028.