Example 2
Matthew is planning on buying a new car. He knows he has already prearranged his financing so he has $35,000.00 available to spend. Matthew has been advised that new cars will show a large first year depreciation before settling in to a steady depreciation rate. His first choice, the Royal 1000, will show a first year depreciation of 25% and will then settle into a depreciation rate of 8%. His second choice, the Majesty LX, will show a first year depreciation of 20% and then becomes 9% for each following year. What will be the resale value for each car in 7 years?
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