Bunuel wrote:

A motorcycle costs $2,500 when it is brand new. At the end of each year it is worth 80 percent of what it was worth at the beginning of the year. What is the motorcycle worth when it is 3 years old?

(A) $1,000

(B) $1,200

(C) $1,280

(D) $1,340

(E) $1,430

A brand new motorcycle is worth $2,500.

At the end of each year, it is worth 80% of its value from the beginning of that year -- in other words, it loses 20% of its value from the beginning of the year.

Calculating the multiplier (.8)\(^3\), then multiplying that by $2,500 seemed more labor-intensive than just subtracting 20 percent from each year's value. Your mileage may vary.

Year 1: loses 20 percent of $2,500

10% = $250, so 20% = $500

End of year 1: ($2,500 - 500) = $2000

Year 2: loses 20 percent of $2,000

10% = $200, so 20% = $400

End of year 2: ($2,000 - 400) = $1,600

Year 3: loses 20 percent of $1,600

10% = $160, so 20% = $320

End of year 3: ($1,600 - 320) = $1,280

Answer C