Question

Jesslyn hypothesizes that the value of antique furniture can be modeled by exponential decay and that the value of a particular piece will decrease at a rate of 0.15% each year. If the furniture was originally valued at $15,000 in 1990 what should Jesslyn expect the value of the furniture to be in 2010?

Answer 1

If this can be modelled by exponential decay, therefore the function must be in the form of:

A = Ao (1 + r)^t

where A is the final value, Ao is the initial = 15000, r is the rate of decay = -0.0015, t is time = 2010 – 1990 = 20

 

A = 15,000 (1 – 0.0015)^20

A = $14,556.36