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The future value after 4 years will be $8156.49 if the value of the car today is $13,000 but will lose 11% of its value each year for the next several years.
What is future value?
Based on an estimated growth rate, the future value is the amount that an asset will be valued at a future date. The computation assumes that at the start date, a fixed amount of cash is made available for investment and that it increases at a constant rate until the selected future date.
We have:
Current value of the car = $13,000
Depreciation rate = 11%
Time n = 4 years
[tex]\rm Future \ value = (value \ at \ present) ( 1- \dfrac{depreciation \ rate}{100})^n[/tex]
[tex]\rm Future \ value = (13000)(1-\frac{11}{100} )^4[/tex]
Future value = $8156.49
Thus, the future value after 4 years will be $8156.49 if the value of the car today is $13,000 but will lose 11% of its value each year for the next several years.
Learn more about the future value here:
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