Value of the car in 2018 after depreciation by 12% each year is equals to $13351.5
" Exponential decay is the decrease in the value of the product at a constant rate over a period of time interval."
Formula used
y = a (1 - r)ⁿ
a = Initial value
r =rate of depreciation
n = time
y = exponential function
According to the question,
Cost of new car 'a' = $28750
Rate of depreciation 'r' = 12%
2018 - 2012 = 6years
n = 6
Substitute the given values in the formula we get,
Exponential function
y = 28750 [1 - (12 / 100)]⁶
⇒ y = 28750 ( 1 - 0.12)⁶
⇒ y = 28750 ( 0.88)⁶
⇒ y = 28750 (0.4644) ( up to four decimals)
⇒ y = $13351.5
Hence, value of the car in 2018 after depreciation by 12% each year is equals to $13351.5
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