A certain car's price decreased by 2.5% (from the original price) each

Price in 96 = 22000
Price decrease each year = 2.5/100*22000 = 550
Price in 97 = 22000 - 550
Price in 98 = 22000 - 2*550
Price in 99 = 22000 - 3*550
Price in 00 = 22000 - 4*550
Price in 01 = 22000 - 5*550
Price in 02 = 22000 - 6*550 = 18700
Investment in the car = 1500

Net price of the car in 02 = 18700 + 1500 = $20200

Correct Option: C

Reduction: 2.5 % from original price

(2.5/100) * 22000 = 550.

6 * 550 = Rs. 3300 reduction.

Increase: Rs, 1500

Final price: 22000 - 3300 + 1500 = 22000 - 1800 = 20200.

C is the answer.

Unless i am not reading the question properly, it is not mentioned that we have to use simple interest AND NOT COMPOUND interest. Am i overthinking?
I did following:
Final Price = P(1-r/100)^t
= 22000(1-25/1000)^7
= 22000(1-1/40)^7
= 22000 (1 - 7/40) Binomial short-cut
= 22000*33/40
= 550*33 = 11*50*3*11 = 121*150 = 18150
Adding cost to final price = 18150+1500 = 19650 => thus B

So in exam, like here (SC - focusing on similarity ), if it is not mentioned SI or CI we should use SI?

A certain car's price decreased by 2.5% (from the original price) each year from 1996 to 2002, during that time the owner of the car invested in a new carburetor and a new audio system for the car, which increased car's price by $1,500. If the price of the car in 1996 was $22,000, what is the car's price in 2002?

A. $18,400
B. $19,500
C. $20,200
D. $20,400
E. $21,100
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Number of years from 1996 to 2002 = 6
Price of the car in 1996 = $22,000
Price decreased each year by 2.5%

We know that the price decreased 6 times @ 2.5% each year as the number of years from 1996 to 2002 is 6
Therefore, in place of going for lengthy and complicated calculation just multiply 2.5 with 6 -
2.5 * 6 = 15
Now, calculate 15% of $22,000
15/100 * 22,000 = $3300
Price of the car after decreasing the price for continuous 6 years @ 2.5%
= Price of Car in year 1996 (Initial Price) - Price decreased in 6 years
= $22,000 - $3300
= $18700

It is mentioned that the car's price increased by $1,500 with the investment in a new carburetor and a new audio system for the car
therefore, the final price of the car in year 2002 is -
= $18,700 + 1,500
= $20,200

Answer is 'C'

hi, can someone tell me why we have used the simple interest formula and not the compound interest formula because to me it seems like a problem that needs compound interest formula

The key is in the wording: "from the original price." That means the car loses 2.5% of $22,000 each year, not 2.5% of its current value.

So this is not compound depreciation. It's a fixed amount each year:

2.5% of 22,000 = 550 dollars lost per year.

Over 6 years, total depreciation = 550 * 6 = 3,300.

Then, add back the $1,500 increase from upgrades.

Final value = 22,000 - 3,300 + 1,500 = $20,200.

Answer: C.