Data:
Depreciating: The value decrease
Rate: 5% per year
2010: $32,000
2013: $?
Step 1: As depreciating means decrease, the value of the car is decaying
Step 2 and step 3: You use the formula below to find the value of the car after 3 years (as the value is decaying the rate in the formula is substracting)
Final value: F
Principal value: P=32000
rate: r=5
Time in years: n=3 (2013-2010=3)
[tex]\begin{gathered} F=P(1-\frac{r}{100})^n \\ \\ F=32000(1-\frac{5}{100})^3 \\ \\ F=32000(0.95)^3 \\ \\ F=27436 \end{gathered}[/tex]In 2013 the value of the car is $27,436