Question

A piece of equipment costs $65,000 new but depreciates 18% per year in each succeeding year. Write an exponential equation for this situation.

Answer 1

Exponential equations are of the form:
\[A = P * (1 + R) ^ {T}\]
Where P is the principal/original value, R is the rate in decimal form (e.g. +18% would be 0.18, -2% would be -0.02, etc.) and T is how many times the rate is applied (e.g. three years with the rate applied yearly would be 3 times, so T would be 3), and A is the value of whatever is put in, after applying the rate T times.

In this scenario, $65000 would be your principal value, your rate would be negative 18%, because you lose 18% every year. A and T would be your variables for this equation.