 Hello and welcome to the session. In this session, we are going to discuss the following question. The question says that, a new car is purchased for $40,000. Its value depreciates at the rate of 10% per annum. What will be its value after 4 years? We know that appreciation is when value of an article increases with passage of time. Depreciation is when value of an article decreases with passage of time. So the compound interest law will be amount A is equal to P into 1 plus R upon 100 raised to power n when value of an article appreciates. The amount A is equal to P into 1 minus R upon 100 raised to power n when value of the article depreciates. With this key idea, let us proceed with the solution. According to the question, a car is purchased for $40,000. Its value depreciates at the rate of 10% per annum. We need to find the value of the car after 4 years. So here, the principle P is equal to $40,000 that is the value at which the car is purchased. The rate of interest R is equal to 10% per annum and the time period that is n is equal to 4 years. As the value of the car depreciates, using the compound interest law that is amount A is equal to P into 1 minus R upon 100 raised to power n, we have A is equal to $40,000 into 1 minus 10 upon 100 raised to power 4 that is equal to $40,000 into 1 minus 1 by 10 raised to power 4 which is equal to $40,000 into 10 minus 1 upon 10 raised to power 4 that is equal to $40,000 into 9 by 10 into 9 by 10 into 9 by 10 into 9 by 10. Which is equal to $26,244. Therefore, value of the car after 4 years is equal to $26,244 which is our answer. This completes our session. Hope you enjoyed the session.