A used car was purchased at N900,000.00. Its value depreciated by 30% in the first year. In each subsequent year, the depreciation was 22% of its value at t...
Question 1 Report
A used car was purchased at N900,000.00. Its value depreciated by 30% in the first year. In each subsequent year, the depreciation was 22% of its value at the beginning of the year. If the car was bought on the 1st of March, 2011, calculate, correct to the nearest hundred naira, the value of the car on the 28th of February, 2015.
Answer Details
Purchase price \(= \text{N}900{,}000.00\) on 1 March 2011. The value on 28 February 2015 is after 4 full years.
Year 1 (to Feb 2012): depreciation 30%, so the value is multiplied by \(0.70\).
Years 2, 3, 4: depreciation 22% each year, so each year the value is multiplied by \(0.78\).
\[ V = 900000 \times 0.70 \times (0.78)^3. \]Now \((0.78)^3 = 0.474552\), and \(900000 \times 0.70 = 630000\):
\[ V = 630000 \times 0.474552 = 298967.76. \]Correct to the nearest hundred naira, the value of the car on 28 February 2015 is N299,000.00.
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