You bought a new car for $14,289.00. It depreciated by 20% during the first year and 10% the second year. How much is the car worth at the end of the two years?


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Kr Ashwin Profile
Kr Ashwin , Loan, answered

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Duane Bryant Profile
Duane Bryant answered
If the car depreciated by 20% then subtracting that from 100% means the car was worth 80% after the first year.  Multiply cost by .80 to find value at end of first year.  Now it lost 10% of it's value at the end of the 2nd year.  So  subtract 10% from 100% and the car is now worth 90% of what it was worth at the end of the first year.  So multiply last answer by .90 to get answer.
You don't add the 20% and the 10% to get 30% and subtract that from 100% and multiply by original cost.  Every year you multiply by the previous value.

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