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Car Depreciation Project

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by

Rebekah Kahle

on 11 November 2013

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Transcript of Car Depreciation Project

Car Depreciation Project
1993 Dodge Caravan
by Rebekah Kahle
Price of the vehicle after this many years
After 7 Years
$3572.79
After 6 Years
y = 5308.22 (.945)^6
$4001.65
After 5 Years
y = 5308.22(945)^5
$4000.44
Financial Options for the Toyota 4runner
Sticker Price
The sticker price for this vehicle is $22,580
The Car Depreciates at a Rate of 6% per year
The Formula
The formula to find out how much a car is worth after a couple of years is
y=a(1-r)^t where
a = the initial amount
r = rate
t = time
Exponential Model
f(x) = 9680.59(.921)^x
Prices of the Dodge after Certian amounts of Years
After 7 Years
Equation: y = 9680.59 (.921)^7

Worth: $5441.51


After 6 Years
y = 9680.59 (.921)^6

$586.27
After 5 Years
y = 9680.59(.921)^5

$6415.05
Sticker Price
The sticker price for this vehicle is $17,555
Depreciation Rate
It has a depreciation rate of 8% per year.
Formula
The formula to find out how much a car is worth after a couple of years is
y=a(1-r)^t where
a = the initial amount
r = rate
t = time
Exponential Model
f(x) = 5308.22(0.945)^x
Financing Options for the Dodge
1993 Toyota 4runner
Summary of Findings
1. Is the value of the car the same, more or less then what you end up paying for it?
The value of the car ends up being less than what you pay for it.
2. How does this make you feel?
It makes me feel disappointed that the value isn't more than what you pay for it.
3. How will you use this information in the future when you start purchasing your own car in real life?
I will do this same process when I am looking into purchasing my own car in real life and take more aspects of buying a car into consideration.

y = 5308.22(.945)^7
Data Table
(x) Years Since 2013 (y) Price of Car One

0 (2013).........................................$22,580
16 (2012)........................................$21,912
17 (2011).........................................$21,076
18 (2010).......................................$20,474
19 (2009)......................................$18,812
20 (2008)....................................$17,597
Data Table
(x) Years Since 2013 (y) Price of Car Two

0 (2013...............................................................$17, 562
16 (2012)..............................................................$16,802
17 (2011)................................................................$16,050
18 (2010)...............................................................$15,000
19 (2009)................................................................$14,809
20 (2008)................................................................$14,080

6 Years at 7% Compounded Semiannually
A(t) = $22,580 (1 + .07/2) ^ 2*6

Total Cost of Loan: $34119

Monthly Payments: $2843
A (t) = $22,580 (1+ .0625/4)^4*5

Total cost of loan: $30,788.72
Monthly Payments: $1129
7 Years at 7.25% Compounded Monthly
Equation: A(t) = 22,580 (1+.0725/12)^12*7
Total cost of loan: $32,547
Monthly Payments: $268.81
5 Years at 6.25% Compounded Quarterly
6 Years at 7% Compounded Semiannually
A (t) = $17,561 (1+ .07/2)^2*6

Total cost of loan: $26535.88

Monthy Payments: $2211.32
5 Years at 6.25% Compounded Quarterly
7 Years at 7.25% Compounded Monthly
A(t) = $17,561 (1 + .0725/12) ^12*7

Total Cost of the Loan: $29126

Monthly Payments: $346.74
A (t) = $17,561 (1 + .0625/4) 4*5
Total Cost of the Loan: $59037
Monthly Payments: $2951.88
Full transcript