A new car cost $25,000. If its value depreciates by 10% in the first year and then by another 10% of its *new* value in the second year, what is the car's value after two years?

Question

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B) $20,250. After the first year, the car's value is $25,000 * (1 - 0.10) = $25,000 * 0.90 = $22,500. After the second year, its value depreciates from this new amount: $22,500 * 0.90 = $20,250.

A new car cost $25,000. If its value depreciates by 10% in the first year and then by another 10% of its new value in the second year, what is the car's value after two years?

✓ Correct Answer: Option B

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