Question

A new bike is valued at $15000 .At the end of each year its value is reduced by 15% at start of year. What it be worth after 3 years. (a) $9211.88 (b) 5000 (c) 4000 (d) 3000

Answer 1

Answer: (a) $9211.88

Step-by-step explanation:

We would apply the formula for exponential decay which is expressed as

y = b(1 - r)^t

Where

y represents the value of the bike after t years.

t represents the number of years.

b represents the initial value of the bike.

r represents rate of decay.

From the information given,

b = $15000

t = 3 years

r = 15% = 15/100 = 0.15

Therefore, the exponential function is

y = 15000(1 - 0.15)^t

y = 15000(0.85)^t

The worth after 3 years would be

y = 15000(0.85)^3

y = $9211.88