Question

A car with an initial cost of $33,000 is decreasing in value at a rate of 7% each year. Write the exponential decay function to determine when the value of the car will be $15,000 to the nearest year

Answer 1

n= 11.65 years

Explanation:

Giving the following information:

Present Value (PV)= $33,000

Future Value (FV)= $15,000

Decrease rate (d)= 7%

To calculate the number of years it will take to reach $15,000; we need to use the following formula:

n= ln(FV/PV) / ln(1+d)

n= ln(15,000/33,000) / ln(1.07)

n= 11.65 years