Question
In: Statistics and Probability
The manufacturer's suggested retail price (MSRP) for a particular car is $24,950, and it is expected...
The manufacturer's suggested retail price (MSRP) for a particular car is $24,950, and it is expected to be worth $19,508 in 2 years. (a) Find a linear depreciation function for this car. (b) Estimate the value of the car 5 years from now. (c) At what rate is the car depreciating?
Solutions
Expert Solution
Answer:
Given that:
The manufacturer's suggested retail price (MSRP) for a particular car is $24,950, and it is expected to be worth$19,508 in 2 years.
(a) Find a linear depreciation function for this car.
We have two points (0,24950),(2,19508)
The slope = 
writing equation in point slope from
b) Estimate the value of the car 5 years from now
x = 5 years the value of car
c) what rate is the car depreciating?
Rate is the car depreciating = slope
Rate is the car depreciating = -2721 i.e $-2721/year
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