financial depreciation help?
During a prolonged recession, property values on Long Island depreciated by 9% every 6 months. If my house cost $200,000 originally, how much was it worth 12 years later? (Round your answer to the nearest dollar.)
i dont know if my equation im using is wrong, im using future value (FV)= present value (PV)(1+r/n)^t
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Answers & Comments
Your equation is correct using the following
PV = 200,000
r = -9%
n = 1
t = 24
And FV = $20,798 which means don't buy property on Long Island
Actually the formula is
(1 + r/n)^(nt) where t is the number of years and n is the number of compounding periods (in this case twice a year) within a year and r is the nominal rate.