A boat depreciates 12.75% per year. If the boat is purchased for $7500, what is the equation of the exponential equation? How much will the boat be worth in 6 years?

1 Answer
May 22, 2018

#$3,365.96#

Explanation:

If the boat depreciates by #12.5%# it means that after a year it is worth #100%-12.5% = 87.5%# of the original value.

After one year: #7500 xx875%#

After two years: #7500 xx87.5xx87.5#

and so on for each year.

We could just multiply by #87.5%# for each year, but it is quicker to use indices.

#Value" = 7500(100%-12.5%)^6#

#"Value" = 7500(87.5%)^6#

#"Value" = 7500(0.875)^6#

#=$3,365.96#