Answer:
27.75%
Step-by-step explanation:
After the first year, the value of the boat depreciates by 15%, so the boat is now worth 85% of its initial value.
After the second year, the value of the boat depreciates by 15% of the 85%, so the boat is now worth 85% of the 85%, or 72.25% of the initial value.
Therefore, the boat depreciates by 27.75%.
We can also show this using a compounding equation:
A = P (1 + r)ᵗ
where A is the final amount,
P is the initial amount,
r is the rate,
and t is time.
In this case, r = -0.15 and t = 2.
A = P (1 − 0.15)²
A = P (0.85)²
A = 0.7225 P
The boat is worth 72.25% of the initial value, so it depreciates by 27.75%.
