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Tara just bought her first car in order to commute to college, a used 2014 Toyota RAV4! The value of the car today is $13,000, but will lose 11% of it’s value each year for the next several years. Down the road, Tara will trade the RAV4 in for a down payment on a newer car. If she trades in her car 4 years from now, how much will it be worth? ## 1 Answer 0 like 0 dislike The future value after 4 years will be$8156.49 if the value of the car today is $13,000 but will lose 11% of its value each year for the next several years. What is future value? Based on an estimated growth rate, the future value is the amount that an asset will be valued at a future date. The computation assumes that at the start date, a fixed amount of cash is made available for investment and that it increases at a constant rate until the selected future date. We have: Current value of the car =$13,000

Depreciation rate = 11%

Time n = 4 years

$$\rm Future \ value = (value \ at \ present) ( 1- \dfrac{depreciation \ rate}{100})^n$$

$$\rm Future \ value = (13000)(1-\frac{11}{100} )^4$$

Future value = $8156.49 Thus, the future value after 4 years will be$8156.49 if the value of the car today is \$13,000 but will lose 11% of its value each year for the next several years.