Arithmetic Reasoning
If Tom’s car is worth $9,000 and depreciates by 7% per year, how much will his car be worth in 2 years.
In working as an ASVAB tutor, I cover 15 subtopics in Arithmetic Reasoning. One of the topics includes interest rate and depreciation. This question is a question about depreciation. Depreciation is the reduction in the value of an asset with the passage of time. The value of a car depreciates over time. In this example the car’s value decreases 7% per year for 2 years. I tell my ASVAB students that the most common mistake people make is to assume that that means the car decreased by 14%. That is not true because the car’s value decreased by 7% for the first year and then decreased by 7% of the value of the second year. This problem requires 4 steps to complete it. Do you know how to solve this problem? I will present the answer and explanation tomorrow.
