Question

The value of a car is expected to decrease exponentially. Which formula can you use to predict the value of the car for a given year?
a. exponential decay

b. half-life

c. compound interest

d. exponential growth

Answer 1

Hey there!

When the value of something goes down over time- a house, a car, anything- it's called depreciation. 

It would be expressed as exponential decay. This is because the value is going down exponentially as stated in the problem. Additionally, when it decays, the growth factor is less than one, so the value steadily decreases.

Let's rule out our other options:

B) Half-Life. This doesn't work because it's usually used for radioactive decay, which is usually a steady decrease of radioactivity and material that divides by two, hence the word half. For example:

Day 0) Started with 10 grams of plutonium
Day 1) 5 grams
Day 2) 2.5 grams

And so on.

C) Compound Interest. Like simple interest, but compunds usually at a certain point - yearly, monthly, every ten years, and so on. But, this is used for interest, mostly in a bank account or if you have a loan. It doesn't exhibit depreciation, and therefore it's not used to predict car value.

D) Exponential Growth- Exponential growth does not work for one main reason - it grows. That would mean that the value of the car goes up- and unless it's an old and very expensive car, that wouldn't be the case.

Hope this helps!