Question

A car is purchased for $30,000. The value of the car depreciates annually so that it is $24,000 after 1 year, $19,200 after 2 years, and $15,360 after 3 years. Why can this situation be modeled using an exponential function?

The value of the car depreciates annually by 20%.
The value of the car depreciates annually by 80%.
The value of the car depreciates annually by $6,000.
The value of the car depreciates annually by $4,800.

Answer 1

It annually drops by 20%

Explanation:

30,000 multiplied by 20% is 6000. Subtract 6000 from 30,000 and you get 24,000. 24,000 multiplied by 20% is 4,800. Subtract 4,800 from 24,000 and you get 19,200. Etc.