Answer:
D) $5385.10
Step-by-step explanation:
Exponential equation of decay:
The exponential equation for the decay of an amount after t years is given by:
[tex]A(t) = A(0)(1-r)^t[/tex]
In which A(0) is the initial amount and r is the decay rate, as a decimal.
If you buy a motorcycle for $12,500 in 2015 and it depreciates (shrinks) in value by 15.5% every year
This means that [tex]A(0) = 12500, r = 0.155[/tex]
So
[tex]A(t) = A(0)(1-r)^t[/tex]
[tex]A(t) = 12500(1-0.155)^t[/tex]
[tex]A(t) = 12500(0.845)^t[/tex]
How much will it be worth in 2020?
2020 is 2020 - 2015 = 5 years after 2015, so this is A(5). So
[tex]A(5) = 12500(0.845)^5 = 5385.10[/tex]
The correct answer is given by option D.
