Explore the average dollar amount of depreciation for a new car purchase valued at $46,000 after one year and five years.
When purchasing a new car, it’s important to understand how much value it loses over time, a concept known as depreciation. Here’s a breakdown of what to expect:
Typically, a new car will depreciate about 20% in its first year. For a car bought at $46,000, the expected depreciation would be:
Depreciation after 1 year: $46,000 x 0.20 = $9,200
This means after one year, the average value of the car would be approximately:
$46,000 - $9,200 = $36,800
Cars usually depreciate about 60% of their initial value after five years. For the same car, the depreciation would be:
Depreciation after 5 years: $46,000 x 0.60 = $27,600
This implies that after five years, the average value of the car would be around:
$46,000 - $27,600 = $18,400