Question

A bicycle is worth 500 dollars , decreases in value by 7.8% per year.Set up a function to model this situation.Use the model to show how much the bike will be worth after 5 years.

Answer 1

$333.138

Explanation:

Given that:

Initial value = $500

% decrease in value per year = 7.8% = 0.078

Price after t years is given by :

P(t) = initial value(1 - 0.078)^t

Where, t = number of years

Price after 5 years :

t = 5

P(5) = 500(1 - 0.078)^5

P(5) = 500(0.922)^5

P(5) = 500 *0.666276668105632

P(5) = 333.138334052816

= $333.138