Question

Dan bought a new computer for $900. Each year, the value of the computer decreased by 25% of the previous year's value. At this rate, what can Dan expect the approximate value of the computer to be after 7 years?

Answer 1

$120.1355

Explanation:

We can model this as an exponencial function:

P = Po * (1+r)^t

Where P is the final value, Po is the inicial value, r is the rate and t is the amount of time.

For this case, we have that Po = 900, r = -25% = -0.25 and t = 7, so we can find the value of P

P = 900 * (1 - 0.25)^7 = $120.1355

The price after 7 years will be $120.1355.