Question

Zeus Industries bought a computer for $2280. It is expected to depreciate at a rate of 30% per year. What will the value of the computer be in 3 years?

Answer 1

This is an exponential growth/decay problem.  It has a formula, and it doesn't matter which you have...the formula is the same for both, except for the fact that you're rate is decreasing instead of increasing so you will use a negative rate. The formula is this: A = Pe^rt, where A is the ending amount, P is the beginning amount, e is euler's number, r is the rate at which something is growing or dying, and t is the time in years. Our particular formula will look like this: A = 2280e^(-.30*3), Notice we have a negative number in for the rate (and of course it's expressed as a decimal!). First simplify the exponents: -.30*3 = -.9. On your calculator you have a 2nd button and a LN button.  When you hit 2nd-->LN you have "e^( " on your display.  Enter in -.9 and hit enter.  That should give you a display of .4065695.  Now multiply that by 2280 to get 926.98, the value of the computer after it depreciates for 3 years at a rate of 30% per year.