Given:
The initial value of car = £2,200
Depreciation rate = 0.5%
To find:
The worth of car after 6 years.
Solution:
Exponential decay model:
[tex]y=a(1-r)^t[/tex]
Where, a is the initial value, r is the rate of depreciation and t is number of years.
Putting a=2200, r=0.005 and t=6, we get
[tex]y=2200(1-0.005)^6[/tex]
[tex]y=2200(0.995)^6[/tex]
[tex]y=2200(0.9703725)[/tex]
[tex]y=2134.8195[/tex]
[tex]y\approx 2134.82[/tex]
Therefore, the worth of the car after 6 years is £2134.82.
