Question

. Eight years ago, Rudi thought that he was making a sound investment by buying $1000 worth of Pro Sports Management stock. Unfortunately, his investment depreciated steadily, losing 15% of its value each year. a. What is the multiplier? b. Write a function using f(t) to describe the situation. c. How much is the stock worth now?

Answer 1

a. 0.85

b.
`f(t) =1000(0.85)^t`

c. $272.49

Explanation:

Given that:

Initial investment made, 8 years ago = $1000

Depreciation value each year = 15%

To find:

a. Multiplier

b. Function
`f(t)` to describe the situation.

c. Worth of stock now.

Solution:

a. Depreciation of 15% means the value becomes (100 - 15) % = 85% or 0.85 of the actual value.

Therefore, the multiplier is 0.85.

b.

Every year the value becomes 0.85 times of the actual value.

If it continues for
`t` years, then the values will be:

`f(t) =1000(0.85)^t`

c. Let us put
`t=8 \ years` to find the worth of stock now.

`\Rightarrow f(8) =1000(0.85)^8\\\Rightarrow \bold{\$272.49}`

So, the answers are:

a. 0.85

b.
`f(t) =1000(0.85)^t`

c. $272.49