A new car worth $20,000 loses 20% of its value every year. Is the value of the car represented by a linear or exponential function?

1 Answer
Apr 18, 2016

Exponential Function
y = $20,000(0.8)^x
where x = time

Explanation:

Exponential function:
y = a(b)^x

a = principal value
b = rate (growth or decay)
x = time

Since the initial value (principal amount) is $20,000 it needs to represent the a value. The rate would be a decay since it is losing 20% of its value every year (1 - 0.2 = 0.8). The time is in year. So it is: y = $20,000(0.8)^x