Question

Barbara made a bad investment. Rather than earning interest, her money is decreasing in value by 11% each week! After just one week, she is down to just $142.40. How much money did she start with? If she does not withdraw her money, how long will it be before she has less than half of what she originally invested?

Answer 1

Answer: She started with $160.

It will take 6 weeks before she has less than half of what she originally invested.

Step-by-step explanation:

If her money is decreasing in value by 11% each week, it means that the rate at which it is decreasing is exponential.

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

A = P(1 - r)^t

Where

A represents the value of the investment after t weeks.

t represents the number of weeks.

P represents the initial value of the investment.

r represents rate of depreciation.

From the information given,

A = $142.40

r = 11% = 11/100 = 0.11

t = 1

Therefore

142.40 = P(1 - 0.11)^1

142.40 = P(0.89)

P = 142.4/0.89

P = 160

For her to have half of what she invested originally, then

80 = 160(0.89)^t

80/160 = (0.89)^t

0.5 = (0.89)^t

Taking log of both sides to base 10

Log 0.5 = log0.89^t = tlog0.89

- 0.3010 = - 0.051t

t = - 0.3010/- 0.051

t = 5.9

Approximately 6 weeks