Question

Ok so I'm working exponential decay functions and I'd like to know in what situations you would substitute e in the equation for exponential depreciation, where e would replace (1-r). So that the expression would be I(e)^rt instead of I(1-r)^t

Answer 1

depends on whether the decay is discrete or continuous

Answer 2

for example, if you say your car loses 15% value every year, and you bought it for $20,000
then after \(t\) years it would be worth
\[20,000(.85)^t\]

Answer 3

whereas if you were looking at say radioactive decay, or newton's law of cooling, where the decrease is continuous, you would use \(Pe^{rt}\)