Question

A new truck that sells for 29,000 depreciates (decreases in value) 12% each year. What is the decay factor b?

a) 0.88
b) 1.12
c) 0.12
d) 0.0012

Answer 1

The decay factor (b) for a new truck that depreciates by 12% annually is 0.88 (1 - 0.12), and the correct answer is option a) 0.88.

Step-by-step explanation:

The decay factor (b) of an item that depreciates 12% each year is calculated by subtracting the percentage of depreciation from 100%. Since depreciation is the decrease in value over time, we take the full value represented by 1 (or 100%) and subtract the depreciation rate in decimal form, which is 0.12.

Therefore, the decay factor is 1 - 0.12 = 0.88.

The correct answer to the question of what the decay factor b is would be option a) 0.88.