Zeus Industries bought a computer for $2500. It is expected to depreciate at a rate of 20% per year. What will the value of the computer be in 2 years?

Question

anonymous · Answer

$$ \large f(t)=2500 \cdot 0.8^t $$

anonymous · Answer

so will it be 3,500

anonymous · Answer

Nope, that's not what happens, if you analyze this function a bit, you see that the last term has a t in the exponent, and the base is less than 1, this means that the function as a whole decreases. 

The computer value doesn't go up, it goes down.

anonymous · Answer

For instance, if I try to sell you my 5 year old computer, you wouldn't pay me the same amount for it that I have paid 5 years ago, when it was something like brand new.

anonymous · Answer

oh ok i put it in the calculator in go 2000 but what is the t

anonymous · Answer

You should put the following into your calculator. Because f is a function of time, denoted as f(t) and you want it after 2 years, you set t=2, such that:

$$ f(2)=2500 \cdot 0.8^{2} =1600$$