Question

Garland Mills purchased a certain piece of machinery 4 years ago for $500,000. Its present resale value is $340,000. Assuming that the machine's resale value decreases exponentially, what will it be 5 years from now? (Round your answer to the nearest dollar.)

Answer 1

Answer:

The machine's resale value in 5 years from now will be $309,392

Explanation:

Future value = present value*exp(cx)

$340,000 = $500,000*exp(4c)

17/25 = exp(4c)

c = -0.096

Future value = present value*exp(cx)

                     = $500,000*exp(-0.096*5)

                     = $309,391.70

Therefore, The machine's resale value in 5 years from now will be $309,392