Answer:
The annual rate of depreciation of the car is 8.05% or 72.41/9
Step-by-step explanation:
1. Let's review the information given to us to answer the question correctly:
Price of the purchase of the car = $ 39,150
Price after 9 years = $ 10,800
2. Determine the rate at which the van depreciates in value.
Let's calculate what is the percentage of depreciation after 9 years, this way:
Percentage of depreciation after 9 years = [1 - (Price after 9 years/Price of the purchase of the car)] * 100
Replacing with the values we know:
Percentage of depreciation after 9 years = [1 - (10,800/39,150)] * 100
Percentage of depreciation after 9 years = [1 - 0.2759] * 100
Percentage of depreciation after 9 years = 72.41%
Annual rate of depreciation = 72.41/9 = 8.05%
