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A JetSki depreciates at 11% of its original value each year. if the Jetski is $8000 at a time of purchase what is the value of a JetSki after five years ?

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sahedali2002
The correct answer would be D) $4,467.25. This should be calculated compoundedly, as depreciation does not work in a linear fashion. Year 1 depreciation would be 11% of $8000 = $7120. Year 2 depreciation would be 11% of $7120 = $6336.80. Year 3 would be so on until you reach Year 5 and you get the final value as $4467.25.
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The rule for this is
Value after n years = 8000(1 - 0.11)^n = 8000(0.89)^n

so after 5 years the value is  8000(0.89)^5 =  $4467  to  the nearest dollar.

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