Answer:
The value of this car is decreasing at a rate of 7%
The purchase price of the car is $23,400
Explanation:
The general equation of a value of a commodity over some time period can be shown as follows:
[tex]V=I(1+r)^t[/tex]
where :
V is the value at a certain year t
I is the initial or purchase value
r is the rate of increase or decrease
t is the time in years
It should be understood that if 1 + r is less than 1, then the value is decreasing over the years
Let us get the rate:
[tex]\begin{gathered} 1\text{ + r = 0.93} \\ r\text{ = 0.93-1 = -0.07} \end{gathered}[/tex]
r is negative and that means there is a decrease at a rate of 7% (7% as a fraction is 7/100) yearly
Now, let us answer the questions
The value of this car is decreasing at a rate of 7%
The purchase price of the car is $23,400
