Question

Zoey purchased a new car in 1992 for $28,000. The value of the car has been depreciating exponentially at a constant rate. If the value of the car was $9,600 in the year 1996, then what would be the predicted value of the car in the year 1998, to the nearest dollar?

Answer 1

V = V0 e^-k t where V is the value of the car and t the time in years

ln (V/V0) = - k t

k = -1/4 ln (96/280) = .268

V = V0 e^-k t = 28000 e^-.268 * 6 = 28000 e^-1.606 = $5621