Question

A man wanted to buy a car that he could sell in 5 year's Times. He has two options:
OPTION 1:The first car is R125000.This car will depreciate at 8% per annum on simple interest.

OPTION 2: Car worth R150000,that will depreciate at 6% per annum on the rereducing balance(Compound interest)

Which car will be worth more after 5 yrs? Show all calculations.

Answer 1

a=p(1-r/100)=125000(1-8/100)5 =125000(92/100)5=125000x(23/25)5=125000x23/25x23/25x23/25x23/25x23/25