A home stereo depreciates by 20% each year.
What's the value of a stereo, purchased new for $1,200, after two years?
Answer(s): A
Explanation:
The stereo depreciates $240 the first year (0.2 × 1200 = 240). Therefore, the value of the stereo after the first year is $1200 $240 = $960. The second year the stereo would depreciate by $192 (0.2 × 960). The value of the stereo after the second year is $960 $192 = $768.
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