Answer: $6,500
Step-by-step explanation:
Question says after 10 years.
The value of the car depreciates by 1/2 every year which is 50%, every 5 years.
In 10 years therefore, the car would have depreciated by half of its value, twice.
Use the future value formula:
= Amount * (1 + rate) ^ no. of periods
= 26,000 * ( 1 - 50%)²
= $6,500
Note: There are two periods because the depreciation is every 5 years and 10 years have gone by so the number of periods is: 10 / 5 = 2 periods
