Question

Hal is asked to write an exponential function to represent the value of a $10,000 investment decreasing at 2% annually. What multiplicative rate of change should Hal use in his function?

Answer 1

Answer: 0.98

Explanation:

The person above me is wrong, the correct answer on ED. is 0.98

Answer 2

For exponential growth or decrease there is a general formula given:

P(t) = P(0) [exp(rt)]where,P(t) is the investment remaining at time t,P(0) is the investment at time 0, initial investment andr is the exponential rate of decrease.

10,000 * 0.02 = 200
10,000 - 200 = 9,800 value after year 1

P(1) = P(0) [exp (rt)]
9,800 = 10,000 (0.98)^1

r = loge (0.98) = ln (0.98) = -0.0202

P(t) = P(0)[exp(-0.0202t)]