Moderate# Applications of Exponents 8

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Depreciation is the decrease of an item's value, which can be determined using a formula similar to the one used for compound interest:

$$V = P(1-r)^{t}$$

where:

$P$ is the original value

$r$ is the depreciate rate

$t$ is the period of time

and $V$ is the new value

If a particular car you buy before you go to college costs 21,000 dollars and the depreciation rate for the car is around $16\%$ per year, what will the value of the car be in 4 years when you graduate from college?