U4.L1.HW: Exponential Functions: Question 25

Question

Explain your answer upon finishing.

A vehicle purchased for $25000 depreciates at a constant rate of 4%.  

Determine the approximate value of the vehicle 12 years after purchase.

Round to the nearest whole number.

Answer 1

This is a problem that uses the exponential growth formula (or in this case it is depreciation).

f(x) = a(1+r)^x where "a" is the initial amount, "r" is the rate of growth/depreciation, and x is the number of time intervals.

f(x) = 25,000(1+(-0.04))¹²

f(x) = 15,318