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Robert has struck an agreement to buy his dads car. The sale takes place when Robert can pay the depreciated value of the car. The
Robert has struck an agreement to buy his dads car. The sale takes place when Robert can pay the depreciated value of the car.
The car is valued at $25,000 today but loses 10% in value each year due to depreciation.
Robert has only $10,000 which he invests into a long-term deposit (investment) earning him 6% p.a. (interest each year).
Graph the value of the car and Roberts term deposit value over time to approximate the time when he can buy the car.
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