2. Ricky wants to buy his own car. Right now he has enough money to choose from this two cars: CAR A, which has a value of 12,000 and depreciates value at 4.5% yearly. CAR B, which has a value of 12,500 and depreciates value at 1.35% bi-annually. If he wants to sell his car after 5 years which will have more value? The Question is…..
3. The first thing that we need to do is recognize what we’re given to know which formula we are going to use. We are going to start with CAR A. P=$12,000 R= -4.5% N= 1 T=5 years That means we have to use the compound interests formula: A is the amount after the investment. P is the original amount. R is the interest rate as a decimal N is the number of compounding periods per year. T is the time in years
4. The next thing we have to do is to substitute in the values. We will have something like this: After that we just need to work out the exponents and the terms inside the brackets. The lastly just pick up your calculator and just punch in the values from above then you will get:
5. The first thing that we need to do is recognize what we’re given to know which formula we are going to use. We are going to do CAR B. P=$12,500 R= -1.35% N= 2 T=5 years That means we have to use the compound interests formula: A is the amount after the investment. P is the original amount. R is the interest rate as a decimal N is the number of compounding periods per year. T is the time in years
6. The next thing we have to do is to substitute in the values. We will have something like this: After that we just need to work out the exponents and the terms inside the brackets. The lastly just pick up your calculator and just punch in the values from above then you will get:
7. Therefore CAR B, would be a better buy for Ricky if he plans to sell his car after 5 years.
