Let value intially be = P
Then it is decreased by 20 %.
So 20% of P =
So after 1 year value is decreased by 0.2P
so value after 1 year will be = P - 0.2P (as its decreased so we will subtract 0.2P from original value P) = 0.8P-------------------------------------(1)
Similarly for 2nd year, this value 0.8P will again be decreased by 20 %
so 20% of 0.8P =
So after 2 years value is decreased by (0.2)(0.8P)
so value after 2 years will be = 0.8P - 0.2(0.8P)
taking 0.8P common out we get 0.8P(1-0.2)
= 0.8P(0.8)
-------------------------(2)
Similarly after 3 years, this value will again be decreased by 20 %
so 20% of
So after 3 years value is decreased by
so value after 3 years will be =
taking common out we get
-----------------------(3)
so from (1), (2), (3) we can see the following pattern
value after 1 year is P(0.8) or
value after 2 years is
value after 3 years is
so value after x years will be ( whatever is the year, that is raised to power on 0.8)
So function is best described by exponential model
where y is the value after x years
so thats the final answer
