Malcolm buys a caravan for £12000. It depreciates by 31% per year. How much is it worth after 7 years?

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Answer 1 · 2018-04-10T08:37:55

Step by step solution. After 7 years it worths 893.5 GBP

W stands for the worth:
1st year: $W_{1} = 0.69 \times 12000 = 8280$ $W_1= 0.69times12000 = 8280$

2nd year: $W_{2} = 0.69 \times 8280 = 5713.2$ $W_2= 0.69times8280 = 5713.2$

3rd year: $W_{3} = 0.69 \times 5713.2 = 3942.1$ $W_3= 0.69times5713.2 = 3942.1$

4th year: $W_{4} = 0.69 \times 3942.1 = 2720.0$ $W_4= 0.69times3942.1 = 2720.0$

5th year: $W_{5} = 0.69 \times 2720.0 = 1876.8$ $W_5= 0.69times2720.0 = 1876.8$

6th year: $W_{6} = 0.69 \times 1876.8 = 1295$ $W_6= 0.69times1876.8 = 1295$

7th year: $W_{7} = 0.69 \times 1295 = 893.5$ $W_7= 0.69times1295 = 893.5$

Note that it keeps its 69% of the value each year..