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8 November, 16:13

joe buys a new boat for $45000. It depreciates 23% a year. How much will the boat be worth after 5 years? Which of the following formulas is appropriate to use for this situation?

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  1. 8 November, 16:41
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    a) $12180.53

    b) A=P (1-r) ^n

    Step-by-step explanation:

    The formula for depreciation to use is this case is;

    A=P (1-r) ^n

    where

    A=value of boat after 5 years

    P=current value of boat = $45000

    r=rate of depreciation = 23% = 0.23

    n=time span after the boat was boat = 5 yrs

    Applying the formula

    A=$45000 (1-0.23) ^5

    A=$45000 (0.77) ^5

    A=$12180.53
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