How to determine the value using compound interest

The video tutorial explains how to calculate the depreciation of a car that originally costs $18,000 and depreciates by 25% annually over four years. The teacher guides students through the process of identifying the initial amount, understanding the concept of depreciation as a decay process, and using a mathematical model to calculate the car's value after four years. The final calculation shows the car's value as $5,695, highlighting the significant impact of a 25% annual depreciation rate.

What is the initial value of the car before any depreciation?

• $18,000

• $13,500

• $22,500

• $15,000

What does a depreciation rate of 25% per year indicate about the car's value?

• The car's value increases by 25% each year.

• The car's value doubles every year.

• The car's value decreases by 25% each year.

• The car's value remains constant.

Which type of equation is used to model the depreciation of the car?

• Quadratic equation

• Growth equation

• Linear equation

• Decay equation

How do you calculate the car's value after four years of depreciation?

• Multiply the initial value by 0.25 raised to the 4th power.

• Multiply the initial value by 0.75 raised to the 4th power.

• Multiply the initial value by 1.25 raised to the 4th power.

• Multiply the initial value by 1.75 raised to the 4th power.

What is the final value of the car after four years of depreciation?

• $3,000

• $5,695

• $7,500

• $10,000