Question

Tucker purchased $4,600 in new equipment for a catering business. He estimates that the value of the equipment is reduced by approximately 40% every two years. Tucker states that the function V(t)=4,600(0.4)2t could be used to represent the value of the equipment, V, in dollars t years after the purchase of the new equipment. Explain whether the function Tucker stated is correct, and, if not, determine the correct function that could be used to find the value of the equipment purchased.

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Answer 1

The function stated by Tucker is incorrect.

V(t) = 4600(0.8)^t

Explanation:

Given the function :

V(t)=4,600(0.4)2t

The initial value of equipment = 4600

Decay rate = 40% of very 2 years

The value of equipment t years after purchase

The exponential decat function goes thus :

V(t) = Initial value * (1 - decay rate)^t

The Decay rate per year = 40% /2 = 20% = 0.2

V(t) = 4600(1 - 0.2)^t

V(t) = 4600(0.8)^t