A car was purchased in 1980 for $12,000. Its value in current dollars depreciates steadily at a rate of 14% per year. What will the car's value be at the beginning of 2003?
A) $1920.05
B) $745.20
C) $628.52
D) $373.81

Question

Quizplus · Accepted Answer

The car's value depreciates by 14% each year, so its value each year is 86% of the previous year's value. From 1980 to 2003 is 23 years. The value in 2003 is $12,000 * (0.86)^23, which equals approximately $373.81.

A Car Was Purchased in 1980 for $12,000