00:01
So to solve for this, we use the feature value formula, which is the fb, future value is equivalent to the present value, multiplied by 1 plus r, the rate of depreciation, which should be a negative because it is a depreciation rate, and we divide it by 100, raised to the power of n or the number of years.
00:24
Okay so the future value of dan's car which depreciates at a rate of 5 % per year is equivalent to what's the present value again the present value is um it is not given okay so let's write here pv then one plus um the future value is yeah it's also unknown so let's write here fb and then our rate rate given is 5%.
01:00
So it's negative because it is depreciation.
01:03
So negative 5 over 100.
01:05
And the n will be the number of years, three years.
01:09
Okay.
01:10
So fv, future value is equivalent to bv.
01:16
1 minus 5 over 10 is 0 .85.
01:28
7375.
01:32
So this is the answer to 1 plus negative 5 over 100 raised to the power of 3.
01:39
And then, therefore, our future value is equivalent to 0 .857075 pv.
01:54
So this is the future value in three years...